Item 1 - Table 2B - Total loans due after one year as of December 31, 2022 - fixed and variable interest rates


(In thousands)	Fixed Interest Rate		Variable Interest Rate		Total
Loans:
Construction	$	75,136	$	231,464	$	306,600
Commercial multifamily	130,141		471,382		601,523
Commercial real estate owner occupied	228,887		383,638		612,525
Commercial real estate non-owner occupied	817,576		1,398,293		2,215,869
Commercial and industrial	360,681		847,990		1,208,671

Residential real estate	1,715,222		594,896		2,310,118
Home equity	2,308		224,714		227,022
Consumer other	257,550		8,398		265,948
Total	$	3,587,501	$	4,160,775	$	7,748,276

Loan Administration.Lending activities are governed by a loan policy approved by the Board’s Risk Management, Capital, and ~~Capital~~Compliance Committee. Internal staff perform and monitor post-closing loan documentation review, quality control, and commercial loan administration. The lending staff assigns a risk rating to all commercial loans, excluding point scored small business loans. Management primarily relies on internal risk management staff to review the risk ratings of the majority of commercial loan balances.

The Bank’s lending activities follow written, non-discriminatory underwriting standards and loan origination procedures established by the Risk Management, Capital and ~~Capital~~Compliance Committee and Management, under the leadership of the Chief Risk Officer. The Bank’s loan underwriting is based on a review of certain factors including risk ratings, repayment capacity, recourse, loan-to-value ratios, and material policy exceptions. The Risk Management, Capital and ~~Capital~~Compliance Committee has established individual and combined loan limits and lending approval authorities. Management’s Executive Loan Committee is responsible for commercial loan approvals in accordance with these standards and procedures. Generally, pass rated secured commercial loans can be approved jointly up to $7 million by the ~~regional lending manager~~business line Managing Director and ~~regional credit officer.~~Credit Director. Loans up to ~~$15~~$12.5 million can be approved with the additional signature of the Chief Credit Officer. Loans in excess of this amount, and designated lower rated loans are approved by the Executive Loan Committee. ~~These limits were expanded in 2016.~~ The Bank tracks loan underwriting exceptions and exception reports are actively monitored by executive lending management.

The Bank’s lending activities are conducted by its salaried and commissioned loan personnel. Designated salaried branch staff originate conforming residential mortgages and receive bonuses based on overall performance. Additionally, the Bank employs commissioned residential mortgage originators. Commercial lenders receive salaries and are eligible for bonuses based on individual and overall performance. The Bank purchases whole loans and participations in loans from banks headquartered in its market and from outside of its market. These loans are underwritten according to the Bank’s underwriting criteria and procedures and are generally serviced by the originating lender under terms of the applicable agreement. The Bank routinely sells newly originated, fixed-rate residential mortgages in the secondary market. Customer rate locks are offered without charge and rate locked applications are generally committed for forward sale or hedged with derivative financial instruments to minimize interest rate risk pending delivery of the loans to the investors. The Bank also sells interest rate derivatives to larger commercial borrowers desiring to fix their interest rates through interest rate swaps, and includes these derivatives in its underwriting and administrative procedures.

The Bank also sells residential mortgages and commercial loan participations on a non-recourse basis. The Bank issues loan commitments to its prospective borrowers conditioned on the occurrence of certain events. Loan origination commitments are made in writing on specified terms and conditions and are generally honored for up to 60 days from ~~approval;~~approval and may be honored for up to six months; some commercial commitments are made for longer terms. The Company also monitors pipelines of loan applications and has processes for issuing letters of interest for commercial loans and pre-approvals for residential mortgages, all of which are generally conditional on completion of underwriting prior to the issuance of formal commitments.

Table of Contents

The loan policy sets certain limits on concentrations of credit and requires periodic reporting of concentrations to the Risk Management, Capital and ~~Capital~~Compliance Committee. The Bank ~~also actively monitors~~has heightened monitoring of its 25 largest borrower relationships. Commercial real estate is generally managed within federal regulatory monitoring guidelines of 300% of risk based capital for non-owner occupied commercial real estate and 100% for construction loans. ~~At year-end 2017, non-owner occupied commercial real estate totaled 270% of Bank risk based capital and outstanding construction loans were 40% of Bank risk based capital.~~ The Bank has hold limits for ~~several~~numerous categories of commercial specialty lending including healthcare, hospitality, designated franchises, and leasing, as well as hold limits for designated commercial loan participations purchased. In most cases, these limits are below 100% of risk based capital for all ~~outstandings~~outstanding loans in each monitored category.

Problem Assets. The Bank prefers to work with borrowers to resolve problems rather than proceeding to foreclosure. For commercial loans, this may result in a period of forbearance or restructuring of the loan, which is normally done at current market terms and does not result in a “troubled” loan designation. For residential mortgage loans, the Bank generally follows FDIC guidelines to attempt a restructuring that will enable owner-occupants to remain in their home. However, if these processes fail to result in a performing loan, then the Bank generally will initiate foreclosure or other proceedings no later than the 90th day of a delinquency, as necessary, to minimize any potential loss. Management reports delinquent loans and non-performing assets to the Board quarterly. Loans are generally removed from accruing status when they reach 90 days delinquent, except for certain loans which are well secured and in the process of collection. Loan collections are managed by a combination of the related business

~~Table of Contents~~

units and the Bank’s special assets group, which focuses on larger, riskier collections and the recovery of purchased credit ~~impaired~~deteriorated loans.

Real estate obtained by the Bank as a result of loan collections, including foreclosures, is classified as real estate owned until sold. When property is acquired it is recorded at fair market value less estimated selling costs at the date of foreclosure, establishing a new cost basis. Holding costs and decreases in fair value after acquisition are expensed. Interest income that would have been recorded for 2017, if non-accruing loans had been current according to their original terms, amounted to $1.2 million. Included in the amount is $181 thousand related to troubled debt restructurings. The amount of interest income on those loans that was recognized in net income in 2017 was $0.7 million. Included in this amount is $362 thousand related to troubled debt restructurings. Interest income on accruing troubled debt restructurings totaled ~~$1.6~~$0.1 million for ~~2017.~~2022. The total carrying value of troubled debt restructurings was ~~$42.0~~$12.4 million at year-end.

The following table sets forth additional information on year-end problem assets and accruing troubled debt restructurings (“TDR”). Due to accounting standards for business combinations, non-accrual loans of acquired banks are recorded as accruing on the acquisition date. Therefore, measures related to accruing and non-accruing loans reflect these standards and may not be comparable to prior periods.

~~Item 1 - Table 3 - Problem Assets and Accruing TDR~~

(In thousands) 2017 2016 2015 2014 2013
Non-accruing loans:

Commercial real estate $ 7,267
$ 5,883
$ 4,882
$ 12,878
$ 13,739
Commercial and industrial loans 7,311
7,523
8,259
1,705
2,355
Residential mortgages 2,883
3,795
3,966
3,908
7,868
Consumer 5,438
5,039
3,768
3,214
3,493
Total non-performing loans 22,899
22,240
20,875
21,705
27,455
Real estate owned —
151
1,725
2,049
2,758
Repossessed assets 1,147
—
—
—
—
Total non-performing assets $ 24,046
$ 22,391
$ 22,600
$ 23,754
$ 30,213

Troubled debt restructurings (accruing) $ 36,172
$ 28,241
$ 12,497
$ 12,612
$ 8,344
Accruing loans 90+ days past due $ 16,480
$ 9,863
$ 5,229
$ 4,568
$ 9,223

Total non-performing loans/total loans 0.28 % 0.34 % 0.36 % 0.46 % 0.66 %
Total non-performing assets/total assets 0.21 % 0.24 % 0.29 % 0.37 % 0.53 %

Asset Classification and Delinquencies. The Bank performs an internal analysis of its commercial loan portfolio and assets to classify such loans and assets in a manner similar to that employed by federal banking regulators. There are four classifications for loans with higher than normal risk: Loss, Doubtful, Substandard, and Special Mention. Usually an asset classified as Loss is fully charged-off. Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected. Doubtful assets have the weaknesses of substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values questionable, and there is a high possibility of loss. Assets that do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories, but possess weaknesses, are designated Special Mention. Please see the additional discussion of non-accruing and potential problem loans in Item 7 and additional information in ~~Note 7 - Loan Loss Allowance of~~notes to the ~~Consolidated Financial Statements.~~financial statements. Impaired loans acquired in business combinations are normally rated Substandard or lower and the fair value assigned to such loans at acquisition includes a component for the possibility of loss if deficiencies are not corrected.

~~Table of Contents~~

Allowance for ~~Loan Losses.~~Credit Losses on Loans. The Bank’s loan portfolio is regularly reviewed by management to evaluate the adequacy of the allowance for ~~loan losses. The~~credit losses on loans. Prior to 2020, the allowance ~~represents~~represented management’s estimate of inherent incurred losses that are probable and estimable as of the date of the financial statements. ~~The allowance includes a specific component for impaired loans (a “specific~~On January 1, 2020, the Company adopted the new loan loss ~~reserve”~~allowance standard based on Current Expected Credit losses (“CECL”). Under this standard, management makes estimates of future economic conditions over the life of the loan portfolio and other future conditions and arrives at a ~~general component for portfolios~~reasonable estimate of ~~all outstanding loans (a “general~~expected loan losses. The basis of the allowance changed from an incurred model to an expected model based on this standard. As a result, the amount of the loan loss ~~reserve”). At~~allowance and the ~~time of acquisition, no allowance for~~ loan ~~losses~~loss provision beginning in 2020 is ~~assigned~~not comparable to ~~loans acquired in business combinations. These loans~~prior years. Also, since different banks may use different estimates and arrive at different expectations, comparisons between banks are ~~carried at fair value, including~~more difficult. Further, since the ~~impact of expected losses, as~~accounting is based on future projections our estimates may change significantly from period to period, the amounts of the ~~acquisition date. An~~ allowance ~~on such loans is established subsequent to~~and provision may be more volatile than under the ~~acquisition date through~~previous model. Further information about the ~~provision for loan losses based on an analysis of factors including environmental factors. The loan loss~~ allowance is discussed further in Note 1 - Summary of Significant Accounting Policies of the Consolidated Financial Statements.

Table of Contents

Management believes that it uses the best information available to establish the ~~allowance for loan losses.~~allowance. However, future adjustments to the allowance for ~~loan~~credit losses on loans may be necessary, and results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making its determinations. ~~Because the estimation of inherent losses cannot be made with certainty, there~~There can be no assurance that the existing allowance for ~~loan~~credit losses is adequate or that increases will not be necessary should the quality of any loan or loan portfolio category deteriorate as a result of the factors discussed above. Additionally, the regulatory agencies, as an integral part of their examination process, also periodically review the Bank’s allowance for loan losses. Suchdeteriorate. Regulatory agencies may require the Bank to make additional provisions for ~~estimated~~credit losses based upon judgments different from those of management. Any material increase in the allowance ~~for loan losses~~ may adversely affect the Bank’s financial condition and results of operations.

~~The following table presents an analysis of the allowance for loan losses for the five years indicated:~~

Item 1 - Table 43 - ~~Allowance~~Credit Quality Ratios


	2022		2021		2020



























Ratios:
Allowance for credit losses on loans/total loans	1.15	%	1.55	%	1.58	%
Non-accrual loans/total loans	0.37	%	0.52	%	0.80	%
Allowance for credit losses/non-accruing loans	309.41	%	300.33	%	196.01	%
Net charge-offs/average loans	0.27	%	0.29	%	0.41	%

Item 1 - Table 3.a - Net charge-offs to average loans for ~~Loan Loss~~each loan category


	2022		2021		2020
Net charge-offs to average loans:
Construction	—	%	—	%	0.01	%
Commercial multifamily	—		—		—
Commercial real estate owner occupied	—		0.02		0.08
Commercial real estate non-owner occupied	0.06		0.18		0.12
Commercial and industrial	0.20		0.09		0.16
Residential real estate	(0.01)		—		0.01
Home equity	—		—		—
Consumer other	0.02		0.01		0.02

(In thousands) 2017 2016 2015 2014 2013
Balance at beginning of year $ 43,998
$ 39,308
$ 35,662
$ 33,323
$ 33,208
Charged-off loans:

Commercial real estate 4,646
3,104
7,546
5,684
5,026
Commercial and industrial loans 4,217
5,715
3,110
3,010
2,917
Residential mortgages 1,603
2,865
1,857
2,596
2,426
Consumer 4,118
2,342
2,175
2,563
2,467
Total charged-off loans 14,584
14,026
14,688
13,853
12,836
Recoveries on charged-off loans:

Commercial real estate 235
303
582
270
549
Commercial and industrial loans 424
389
458
228
211
Residential mortgages 313
304
205
365
399
Consumer 423
358
363
361
414
Total recoveries 1,395
1,354
1,608
1,224
1,573
Net loans charged-off 13,189
12,672
13,080
12,629
11,263
Provision for loan losses 21,025
17,362
16,726
14,968
11,378
Balance at end of year $ 51,834
$ 43,998
$ 39,308
$ 35,662
$ 33,323

Ratios:

Net charge-offs/average loans 0.19 % 0.21 % 0.25 % 0.29 % 0.29 %
Recoveries/charged-off loans 9.57
9.65
10.95
8.84
12.25
Net loans charged-off/allowance for loan losses 25.44
28.80
33.28
35.41
33.80
Allowance for loan losses/total loans 0.62
0.67
0.69
0.76
0.80
Allowance for loan losses/non-accruing loans 226.36
197.83
188.30
164.30
121.37

Table of Contents

The following tables present year-end data for the approximate allocation of the allowance for ~~loan~~credit losses on loans by loan categories at the dates indicated (including an apportionment of any unallocated amount). The first table shows for each category the amount of the allowance allocated to that category as a percentage of the outstanding loans in that category. The second table shows the allocated allowance together with the percentage of loans in each category to total loans. Management believes that the allowance can be allocated by category only on an approximate basis. The allocation of the allowance to each category is not indicative of future losses and does not restrict the use of any of the allowance to absorb losses in any category. ~~Due to the impact~~

Item 1 - Table 4A - Allocation of ~~accounting standards~~Allowance for ~~acquired loans, data in the accompanying tables may not be comparable between accounting periods.~~Credit Losses on Loans by Category (as of year-end)


	2022				2021				2020
(Dollars in thousands)	Amount Allocated		Percent Allocated to Total Loans in Each Category		Amount Allocated		Percent Allocated to Total Loans in Each Category		Amount Allocated		Percent Allocated to Total Loans in Each Category
Construction	$	1,227	0.4	%	$	3,206	1.0	%	$	5,111	1.1	%
Commercial multifamily	1,810		0.3		6,120		1.2		5,916		1.2
Commercial real estate owner occupied	10,739		1.7		12,752		2.1		12,380		2.2
Commercial real estate non-owner occupied	30,724		1.2		32,106		1.5		35,850		1.7
Commercial and industrial	18,743		1.3		22,584		1.8		25,013		1.3
Residential real estate	18,666		0.8		22,734		1.5		28,491		1.5
Home equity	2,173		1.0		4,006		1.6		6,482		2.2
Consumer other	12,188		4.5		2,586		1.3		8,059		2.7
Total	$	96,270	1.2	%	$	106,094	1.6	%	$	127,302	1.6	%

Item 1 - Table 5A4B - Allocation of Allowance for ~~Loan Loss by Category~~Credit Losses on Loans (as of year-end)


	2022				2021				2020
(Dollars in thousands)	Amount Allocated		Percent of Loans in Each Category to Total Loans		Amount Allocated		Percent of Loans in Each Category to Total Loans		Amount Allocated		Percent of Loans in Each Category to Total Loans
Construction	$	1,227	3.8	%	$	3,206	4.8	%	$	5,111	5.6	%
Commercial multifamily	1,810		7.4		6,120		7.5		5,916		6.0
Commercial real estate owner occupied	10,739		7.7		12,752		8.9		12,380		6.8
Commercial real estate non-owner occupied	30,724		30.0		32,106		31.6		35,850		26.2
Commercial and industrial	18,743		17.4		22,584		18.8		25,013		24.0
Residential real estate	18,666		27.7		22,734		21.8		28,491		23.9
Home equity	2,173		2.7		4,006		3.7		6,482		3.7
Consumer other	12,188		3.3		2,586		2.9		8,059		3.8
Total	$	96,270	100.0	%	$	106,094	100.0	%	$	127,302	100.0	%

2017 2016 2015 2014 2013
(Dollars in thousands) Amount
Allocated Percent Allocated to Total Loans in Each Category Amount
Allocated Percent Allocated to Total Loans in Each Category Amount
Allocated Percent Allocated to Total Loans in Each Category Amount
Allocated Percent Allocated to Total Loans in Each Category Amount
Allocated Percent Allocated to Total Loans in Each Category
Commercial real estate $ 20,699
0.63 % $ 18,801
0.72 % $ 16,494
0.80 % $ 15,539
0.96 % $ 16,112
1.13 %
Commercial and industrial loans 14,975
0.83 % 10,611
1.00 % 8,715
0.83 % 6,322
0.79 % 5,770
0.85 %
Residential mortgages 10,018
0.48 % 8,571
0.45 % 8,589
0.47 % 7,480
0.50 % 7,562
0.55 %
Consumer 6,142
0.54 % 6,015
0.61 % 5,510
0.69 % 6,321
0.82 % 3,879
0.56 %

Total $ 51,834
0.62 % $ 43,998
0.67 % $ 39,308
0.69 % $ 35,662
0.76 % $ 33,323
0.80 %

~~Item 1 - Table 5B - Allocation of Allowance for Loan Loss (as of year-end)~~

2017 2016 2015 2014 2013
(Dollars in thousands) Amount
Allocated Percent of
Loans in
Each
Category to Total
Loans Amount
Allocated Percent of
Loans in
Each
Category to Total
Loans Amount
Allocated Percent of
Loans in
Each
Category to Total
Loans Amount
Allocated Percent of
Loans in
Each
Category to Total
Loans Amount
Allocated Percent of
Loans in
Each
Category to Total
Loans
Commercial real estate $ 20,699
39.33 % $ 18,801
39.95 % $ 16,494
41.96 % $ 15,539
34.43 % $ 16,112
41.26 %
Commercial and industrial loans 14,975
21.74 % 10,611
16.22 % 8,715
22.10 % 6,322
17.19 % 5,770
9.08 %
Residential mortgages 10,018
25.34 % 8,571
28.90 % 8,589
21.91 % 7,480
31.97 % 7,562
33.11 %
Consumer 6,142
13.59 % 6,015
14.93 % 5,510
14.03 % 6,321
16.41 % 3,879
16.55 %

Total $ 51,834
100.00 % $ 43,998
100.00 % $ 39,308
100.00 % $ 35,662
100.00 % $ 33,323
100.00 %

Table of Contents

INVESTMENT SECURITIES ACTIVITIES

The securities portfolio provides cash flow to protect the safety of customer deposits and as a potential source of liquidity. The portfolio is also used to manage interest rate risk and to earn a reasonable return on investment. Decisions are made in accordance with the Company’s investment policy and include consideration of risk, return, duration, and portfolio concentrations. Day-to-day oversight of the portfolio rests with the Chief Financial Officer and the Treasurer. The Enterprise Risk Management/Asset-Liability Committee meets multiple times each quarter and reviews investment strategies. The Risk Management, Capital and ~~Capital~~Compliance Committee of the Board of Directors provides general oversight of the investment function.

Historically, the Company has maintained short-term investment balances as a component of cash and cash equivalents which are a component of short-term liquidity management. Due to the pandemic, with a surge in demand deposits and a reduction in loan balances, the balance of short-term investments increased in 2020 and 2021 due to the comparatively low yields and spreads on longer duration investment securities. Most short-term investments have been maintained at the Federal Reserve Bank of Boston.

The Company has historically maintained a high-quality portfolio of managed duration mortgage-backed securities, together with a portfolio of municipal bonds including national and local issuers and local economic development bonds issued to non-profit organizations. Nearly all of the mortgage-backed securities are issued by Ginnie Mae, Fannie Mae, or Freddie Mac, consisting principally of collateralized mortgage obligations (generally consisting of planned amortization class ~~bonds)~~bonds and pass-through securities). ~~Other than securities issued by the above agencies, no other issuer concentrations exceeding 10% of stockholders’ equity existed at year-end 2017.~~ The municipal portfolio provides tax-advantaged yield, and the local economic development bonds were originated by the Company to area borrowers. The Company invests in investment grade corporate bonds and Agency commercial mortgage-backed securities. Purchases of non-investment grade fixed-income securities have consisted primarily of capital instruments issued by local and regional financial ~~institutions and a mutual fund investing in non-investment grade bonds of national corporate issuers and in community reinvestment projects.~~institutions. The Company also invests in equity securities of local financial institutions, including those that might be future potential partners, as well as dividend yielding equity securities of national corporate exchange traded issuers. Historically, the Company acquired equity securities in the Bank, which was allowed under its savings bank charter. As a result of the Bank's charter change in 2014, equity security purchases after that date have been conducted at the holding company level.funds financing community reinvestment projects. The Bank owns restricted equity in the Federal Home Loan Bank of Boston (“FHLBB”) based on its operating relationship with the FHLBB. The Company has various hold limits limiting credit and instrument exposures.

The Company owns an interest rate swap against a tax advantaged economic development bond issued to a local not-for-profit organization, and as a result this security is carried as a trading account security. The Company generally designates ~~investment~~debt securities as available for sale, but sometimes designates longer-duration municipal and other securities as held to maturity based on its intent. This also allows the Company to more effectively manage the potential impact of longer-duration, fixed-rate securities on ~~stockholders'~~shareholders' equity in the event of rising interest rates. Based on a new accounting pronouncement effective in 2018, unrealized gains and losses on equity securities available for sale will be recorded to current period income, rather than to equity. The Company is assessing its portfolio strategies in the context of this accounting change.

~~The following tables present the year-end amortized cost and fair value of the Company’s securities, by type of security, for the three years indicated.~~

~~Item 1 - Table 6A - Amortized Cost and Fair Value of Securities~~

2017 2016 2015
(In thousands) Amortized
Cost Fair
Value Amortized
Cost Fair
Value Amortized
Cost Fair
Value
Securities available for sale

Municipal bonds and obligations $ 113,427
$ 118,233
$ 117,910
$ 119,816
$ 99,922
$ 104,561
Mortgage-backed securities 1,142,656
1,130,403
948,661
945,129
960,907
959,865
Other bonds and obligations 131,167
132,278
78,877
79,051
57,742
56,064
Marketable equity securities 36,483
45,185
47,858
65,541
30,522
33,967
Total securities available for sale $ 1,423,733
$ 1,426,099
$ 1,193,306
$ 1,209,537
$ 1,149,093
$ 1,154,457

Securities held to maturity

Municipal bonds and obligations $ 270,310
$ 278,895
$ 203,463
$ 204,986
$ 94,642
$ 97,967
Mortgage-backed securities 92,115
92,242
95,302
95,495
68
71
Tax advantaged economic development bonds 34,357
33,818
35,278
36,874
36,613
38,537
Other bonds and obligations 321
321
325
325
329
329
Total securities held to maturity $ 397,103
$ 405,276
$ 334,368
$ 337,680
$ 131,652
$ 136,904

Trading account security $ 10,755
$ 12,277
$ 11,387
$ 13,229
$ 11,984
$ 14,189
Restricted equity securities $ 63,085
$ 63,085
$ 71,112
$ 71,112
$ 71,018
$ 71,018

~~Item 1 - Table 6B - Amortized Cost and Fair Value of Securities~~

2017 2016 2015
(In thousands) Amortized
Cost Fair
Value Amortized
Cost Fair
Value Amortized
Cost Fair
Value
U.S. Treasuries, other Government agencies and corporations $ 1,271,254
$ 1,267,830
$ 1,091,821
$ 1,106,165
$ 991,497
$ 993,903
Municipal bonds and obligations 428,849
443,223
368,038
374,905
243,161
255,254
Other bonds and obligations 194,573
195,684
150,314
150,488
129,089
127,411

Total Securities $ 1,894,676
$ 1,906,737
$ 1,610,173
$ 1,631,558
$ 1,363,747
$ 1,376,568

~~The schedule includes available-for-sale and held-to-maturity securities, as well as the trading security and restricted equity securities.~~

~~Table of Contents~~

The following table summarizes year-end ~~2017~~2022 amortized cost, weighted average yields, and contractual maturities of debt securities. Yields are shown on a fully taxable equivalent ~~basis.~~basis and are based on amortized cost. A significant portion of the mortgage-based securities are planned amortization class bonds. Their expected durations ~~are~~were targeted at 3-5 years, ~~at current~~but durations lengthened due to the slower prepayment speeds of all mortgage related instruments in the environment of rising interest rates ~~but the~~in 2022. The contractual maturities shown below reflect the underlying maturities of the collateral mortgages. Additionally, the mortgage-based securities maturities shown below are based on final maturities and do not include scheduled amortization. Yields include amortization and accretion of premiums and discounts. There were no material changes in the tax-exempt portfolio.

Item 1 - Table 75 - Weighted Average Yield


	One Year or Less				More than One Year to Five Years				More than Five Years to Ten Years				More than Ten Years				Total
(In millions)	Amortized Cost		Weighted Average Yield		Amortized Cost		Weighted Average Yield		Amortized Cost		Weighted Average Yield		Amortized Cost		Weighted Average Yield		Amortized Cost		Weighted Average Yield
Municipal bonds and obligations	$	1.4	5.2	%	$	7.4	4.3	%	$	39.5	4.9	%	$	284.4	4.1	%	$	332.7	4.3	%
Mortgage-backed securities	0.1		2.1	%	43.4		2.2	%	229.0		1.8	%	1,581.1		1.7	%	1,853.6		1.5	%
Other bonds and obligations	12.1		3.6	%	6.1		7.1	%	38.7		4.3	%	1.5		3.8	%	58.4		2.0	%
Total	$	13.6	3.8	%	$	56.9	3.0	%	$	307.2	2.5	%	$	1,867.0	2.1	%	$	2,244.7	1.9	%

One Year or Less More than One
Year to Five Years More than Five Years
to Ten Years More than Ten Years Total
(In millions) Amortized
Cost Weighted
Average
Yield Amortized
Cost Weighted
Average
Yield Amortized
Cost Weighted
Average
Yield Amortized
Cost Weighted
Average
Yield Amortized
Cost Weighted
Average
Yield
Municipal bonds and obligations $ 1.6
3.6 % $ 28.7
3.8 % $ 26.4
4.8 % $ 327.0
5.0 % $ 383.7
4.9 %
Mortgage-backed securities 0.1
3.0 % 4.1
2.4 % 45.8
2.3 % 1,184.6
2.5 % 1,234.6
2.5 %
Other bonds and obligations 0.3
4.7 % 29.8
5.0 % 57.6
5.4 % 78.4
3.5 % 166.1
4.4 %
Total $ 2.0
3.7 % $ 62.6
4.3 % $ 129.8
4.2 % $ 1,590.0
3.1 % $ 1,784.4
3.2 %

Table of Contents

DEPOSIT ACTIVITIES AND OTHER SOURCES OF FUNDS

Deposits are the major source of funds for the Bank’s lending and investment activities. Deposit accounts are the primary product and service interaction with the Bank’s customers. The Bank serves personal, commercial, non-profit, and municipal deposit customers. Most of the Bank’s deposits are generated from the areas surrounding its branch offices. The Bank offers a wide variety of deposit accounts with a range of interest rates and terms. The Bank also periodically offers promotional interest rates and terms for limited periods of time. The Bank’s deposit accounts consist of demand deposits (non-interest-bearing checking), NOW (interest-bearing checking), regular savings, money market savings, and time certificates of deposit. Additionally, the Bank offers a variety of retirement deposit accounts to personal and business customers.

The Bank emphasizes its transaction deposits --– checking and NOW accounts --– for personal accounts and checking accounts promoted to businesses. These accounts have the lowest marginal cost to the Bank and are also often a core account for a customer relationship. The Bank offers a courtesy overdraft program to improve customer service, and also provides debit cards and other electronic fee producing payment services to transaction account customers. The Bank offers targeted online and mobile deposit account opening capabilities for personal accounts. The Bank promotes remote deposit capture devices so that commercial accounts can make deposits from their place of business. ~~Additionally, the Bank offers a variety of retirement deposit accounts to personal and business customers.~~

Deposit related fees ~~are a significant source of fee income to the Bank, including~~include overdraft ~~and~~fees, interchange fees related to debit card ~~usage. Deposit~~usage, service ~~fee income also includes~~charges, and other miscellaneous transactions and convenience services sold to customers through the branch system as part of an overall service relationship. The Bank offers compensating balance arrangements for larger business customers as an alternative to fees charged for checking account services. Berkshire’s Business Connection is a personal financial services benefit package designed for the employees of its business customers.

In addition to providing service through its branches, Berkshire provides services to deposit customers through its private bankers, MyBankers, commercial/small business relationship managers, and call center representatives. Commercial cash management services are an important commercial service offered to commercial and governmental depositors and a fee income source to the bank. ~~With the Commerce acquisition, the~~The Bank ~~acquired~~also operates a commercial payment processing business that serves regional and national payroll service bureau ~~customers.~~ customers, with the majority of volume originated by a leading national provider of payroll and human capital management software solutions.These payroll deposits often fluctuate daily by hundreds of millions of dollars depending on payroll cycles. Payroll deposits were concentrated in money market deposit balances at year-end 2022. The Bank was one of the top 50 bank ACH originators by volume in 2021 based on the most recent data available.

Online banking and mobile banking functionality is increasingly important as a component of deposit account access and service delivery. The Bank is also gradually deploying its MyTeller video tellers to complement and extend its service capabilities in its branches. The Bank has partnered with a third party fintech company to provide enhanced online deposit account opening services and plans in 2023 to implement a new online and mobile banking platform developed in partnership with this provider as an important milestone in its DigitouchSM strategy. The Company also is monitoring the development of payment services which are growing in their importance in the personal and commercial deposit markets. Near year-end, the Company recruited experienced senior officers to enhance its offerings and market development for government banking and international services, which are expected to support further development of commercial deposit sources.

Table of Contents

institutional accounts. These balances are viewed as part of overall relationship balances with regional customers. Brokered deposits are sourced through selected Board approved brokers; these deposits are viewed as potentially more volatile than other deposits and are managed as a component of the Bank's liquidity policies.

The following table presents information concerning average balances and weighted average interest rates on the Bank’s interest-bearing deposit accounts for the years indicated.

Item 1 - Table 86 - Average Balance and Weighted Average Rates for Deposits


	2022						2021						2020
(In millions)	Average Balance		Percent of Total Average Deposits		Weighted Average Rate		Average Balance		Percent of Total Average Deposits		Weighted Average Rate		Average Balance		Percent of Total Average Deposits		Weighted Average Rate

Demand	$	2,914.9	30	%	—	%	$	3,008.5	30	%	—	%	$	2,324.6	23	%	—	%
NOW and other	1,416.7		14		0.4		976.4		10		0.1		1,216.6		12		0.3
Money market	2,809.1		29		0.5		3,293.5		32		0.2		2,713.6		26		0.6
Savings	1,114.8		11		0.1		1,111.6		11		0.1		914.1		9		0.1
Time	1,541.7		16		0.9		1,678.9		17		0.9		3,102.9		30		1.7
Total	$	9,797.2	100	%	0.9	%	$	10,068.9	100	%	0.3	%	$	10,271.8	100	%	0.7	%

2017 2016 2015
(In millions) Average
Balance Percent
of Total
Average
Deposits Weighted
Average
Rate Average
Balance Percent
of Total
Average
Deposits Weighted
Average
Rate Average
Balance Percent
of Total
Average
Deposits Weighted
Average
Rate
Demand $ 1,296.4
18 % — % $ 1,081.0
19 % — % $ 972.6
19 % — %
NOW 591.0
8
0.3
487.8
8
0.1
462.9
9
0.2
Money market 1,935.8
27
0.6
1,470.3
26
0.5
1,444.1
28
0.4
Savings 680.1
10
0.1
610.8
11
0.1
582.4
11
0.2
Time 2,581.1
37
1.2
2,094.8
36
1.1
1,684.8
33
0.9
Total $ 7,084.4
100 % 0.6 % $ 5,744.7
100 % 0.5 % $ 5,146.8
100 % 0.5 %

Estimated uninsured deposits were $3.8 billion and $3.7 billion at December 31, 2022 and 2021, respectively. At year-end ~~2017,~~2022, time deposits in excess of the ~~Bank had~~FDIC insurance limit and estimated time ~~deposit accounts in amounts of $100 thousand or more maturing~~deposits that are otherwise uninsured by maturity were as follows:

Item 1 - Table 97 - Maturity of Deposits ~~> $100,000~~>$250,000


Maturity Period	Amount		Weighted Average Rate		Maturity Period	Time Deposits that Meet or Exceed the FDIC Insurance Limit		Estimated Aggregate Time Deposits that Meet or Exceed the FDIC Insurance Limit and Otherwise Uninsured Time Deposits
(In thousands)					(In thousands)
Three months or less	$	656,814	1.10	%	Three months or less	$	38,117	$	59,192
Over 3 months through 6 months	350,824		1.31		Over 3 months through 6 months	42,668		42,836
Over 6 months through 12 months	395,429		1.39		Over 6 months through 12 months	142,382		164,035
Over 12 months	753,353		1.72		Over 12 months	218,675		266,841
Total	$	2,156,420	1.40	%	Total	$	441,842	$	532,904

The Bank’s deposits are insured by the FDIC. The Bank utilizes brokered time deposits to broaden its funding base, augment its interest rate risk management vehicles, and to support loan growth. The Bank also offers brokered reciprocal money market arrangements to provide additional deposit protection to certain large commercial and institutional accounts. These balances are viewed as part of overall relationship balances with regional customers. Brokered deposits are sourced through selected Board approved brokers and are managed as a component of the Bank's liquidity policies.

The Company also uses borrowings from the FHLBB as an additional source of funding, particularly for daily cash management and for funding longer duration assets. FHLBB advances also provide more pricing and option alternatives for particular asset/liability needs. The FHLBB functions as a central reserve bank providing credit for member institutions. As an FHLBB member, the Company is required to own capital stock of the organization. Borrowings from this institution are secured by a blanket lien on most of the Bank’s mortgage loans and mortgage-related securities, as well as certain other assets. Advances are made under several different credit programs with different lending standards, interest rates, and range of maturities. The Bank also has access to borrowings from the Federal Reserve Bank of Boston.

The Company ~~has~~had a $15 million trust preferred obligation and a $7 million trust preferred obligation outstanding, as well as ~~$74~~$100 million in ~~senior~~ subordinated ~~notes.~~notes at year-end 2022. The Company’s common stock is listed on the New York Stock ~~Exchange.~~Exchange under the ticker “BHLB”. Subject to certain limitations, the Company can also choose to issue common stock, preferred stock, subordinated debt, or senior debt in public stock offerings or private placements. The Company maintains a ~~universal~~ shelf registration ~~with the SEC to facilitate future potential~~as part of its routine capital ~~issuances.~~

management.

Table of Contents

DERIVATIVE FINANCIAL INSTRUMENTS

The Company offers interest rate swaps to commercial loan customers who wish to fix the interest rates on their loans, and the Company backs these swaps with offsetting swaps with national bank counterparties. With other lending institutions, the Company engages in risk participation agreements. These arrangements are structured similarly to its swaps with commercial borrowers, but a different bank is the lead underwriter. The Company gets paid a fee to take on the risk associated with having to make the lead bank whole on Berkshire’s portion of the pro-rated swap should the borrower default. These swaps are designated as economic hedges. ~~Based on changes in federal regulation, interest~~Interest rate swaps that meet certain criteria to be viewed as conforming are required to be cleared through ~~exchanges beginning when the $10 billion threshold is crossed.~~exchanges. The Bank has designated a national financial institution as its clearing agent.

The Company’s mortgage banking activities result in derivatives. Commitments to lend are provided on applications for residential mortgages intended for resale and are accounted for as non-hedging derivatives. The Company arranges offsetting forward sales commitments for most of these rate-locks with national bank counterparties, which are designated as economic hedges. Commitments on applications intended to be held for investment are not accounted for as derivative financial instruments.

The Company has a policy for managing its derivative financial instruments, and the policy and program activity are overseen by the Risk Management, Capital and ~~Capital~~Compliance Committee. Derivative financial instruments with counterparties which are not customers are limited to a select number of national financial institutions. Collateral may be required based on financial condition tests. The Company works with third-party firms which assist in marketing derivative transactions, executing transactions, and providing information for bookkeeping and accounting purposes.

The Company sometimes uses interest rate swap instruments for its own account to fix the interest rate on some of its borrowings, all of which have been designated as cash flow hedges. The Company ~~terminated its outstanding cash flow hedges in the first quarter of 2017. The Company evaluates these hedges as part of its overall~~may also use interest rate ~~risk management.~~collars or other derivative instruments in managing its interest rate risk. The Company also ~~expects to begin~~has begun offering forward foreign exchange derivatives to its commercial markets as part of its expanded international banking services. The Company expects to back these forwards with offsetting forwards with national bank counterparties. This activity would be targeted to support routine commercial needs of customers engaged in international trading activities and would only be offered for bank approved currencies and ~~durations.~~durations.

LIBOR BASED INSTRUMENTS

The Company’s floating-rate funding, certain hedging transactions and certain of the Company’s products, such as floating-rate loans and mortgages, determine the applicable interest rate or payment amount by reference to a benchmark rate using the London Interbank Offered Rate (“LIBOR”). Pursuant to bank regulations, the use of LIBOR as an index for new contracts was prohibited beginning in 2022. The use of LIBOR as an index on existing “Legacy” contracts will be discontinued beginning in 2023. There is further discussion of the LIBOR transition in Item 1A and Item 7 of this report.

Table of Contents

WEALTH MANAGEMENT SERVICES

The Company’s Wealth Management Group provides consultative investment management, trust administration, and financial planning to individuals, businesses, and institutions, with an emphasis on personal investment management. The Wealth Management Group has built a track record over more than a decade with its dedicated in-house investment management team. The Bank also provides a full line of investment products, financial planning, and brokerage services through BerkshireBanc Investment Services utilizing Commonwealth Financial Network as the broker/dealer. The Group’s principal operations are in Western New England and it is expanding services in the Company’s other regions. In 2016, the Bank purchased the business assets and operations of Ronald N. Lazzaro, P.C., a provider of financial advisory services in Rutland, Vermont. At year-end 2017, assets under management totaled $1.5 billion, including $1.0 billion in the Bank’s traditional wealth/trust platform and the remainder is managed through its investment services and financial advisory teams. The Bank is integrating with its growing private banking and MyBanker teams to further develop wealth management account generation.

~~INSURANCE~~

~~As an independent insurance agent,~~ The Wealth Management Group reported $1.7 billion in total assets under management at year-end 2022. The Company expanded this team during the Berkshire Insurance Group represents a carefully selected group of financially sound, reputable insurance companies offering attractive coverage at competitive prices. The Insurance Group offers a full line of personalyear and commercial property and casualty insurance. It also offers employee benefits insurance and a full line of personal life, health, and financial services insurance products. Berkshire Insurance Group operates a focused cross-sell program of insurance and banking products through all offices and brancheshas introduced Socially Responsible Investment portfolios as another element of the ~~Bank with some~~Company’s overall vision of being a leading socially responsible company, and as part of a brand theme that Where You Invest Matters.

HUMAN CAPITAL MANAGEMENT

Berkshire’s people are the ~~Group’s offices located within the Bank’s branches. The Group’s principal operations are~~driving force behind its progress on Berkshire’s Exciting Strategic Transformation (BEST) plan and vision of being a high performing, leading socially responsible community bank in ~~Western~~ New England and beyond. The Company’s approach to human capital management is grounded in its corporate values and focuses on:

•Strong oversight and risk management practices

•Recruitment

•Compensation & Benefits

•Training, Development, Engagement & Retention

•Health & Wellness

OVERSIGHT

The Board of Directors has ultimate responsibility for the strategy of the Company. The Compensation Committee of the Board of Directors oversees executive compensation matters and the Corporate Responsibility & Culture committee oversees company culture as well as diversity, equity and inclusion performance. The full Board also receives an annual briefing on employee engagement. The SEVP, Chief Human Resources & Culture Officer provides management oversight on human capital matters. The Company proactively identifies potential human capital related risks, such as the labor market shortage, rising labor costs, and employee retention and designs strategies to mitigate those risks. Strong human capital management is viewed as integral to the Company's transformation and ability to meet its strategic objectives.

RECRUITMENT

Berkshire operates in a highly competitive labor market with strong competition for top talent. The Company relies on and continues to recruit employees with the right mix of skills, expertise and experiences based on current openings and forecasted needs. The Company leverages several strategies to support its talent pipeline and talent acquisition activities including formal advertising, postings on targeted career sites, career events, internship placements, affinity group relationships, and the use of experienced external recruiters for key management and specialized positions. Berkshire also has a small internal team of talent recruitment professionals.

Berkshire maintains a hybrid work model to expand its access to top talent and provide its employees with workplace flexibility. These strategies have proved effective in meeting the demand for talent demonstrated by the Company’s strong track record of attracting high-caliber talent across retail, commercial, wealth management, business banking, technology and operational areas. In addition, as market disruptions from mergers remain and recessionary pressures impact other industries, Berkshire will continue to leverage its differentiated brand and unique market positioning to hire community-focused bankers from its competitors and attract high-performing operational talent from outside the industry.

COMPENSATION & BENEFITS

A highly competitive labor market along with inflationary pressures has impacted labor costs for all businesses. Berkshire is not immune to these economic pressures. The Company continually evaluates its compensation strategies and benefits programs, benchmarks to industry and peers and surveys the landscape of best practices to develop compensation and benefits packages that reward performance and retain top talent at all levels of the Company. Against this backdrop, and in keeping with the Company’s socially responsible mission, Berkshire raised the minimum starting pay to $17/hour in 2022. It also enhanced its vacation benefit as well as its incentive plans across lines of business to provide opportunities for employees to earn higher compensation and bonuses for strong performance aligned with Berkshire’s strategic objectives.

Table of Contents

Berkshire provides comprehensive medical coverage, paid vacation, personal and sick time, paid protective leave for gender-based violence, a 401(k) plan with employer match, long-term disability insurance, and group term life insurance. In addition, Berkshire offers a day care reimbursement program, a dependent care expense account, family and medical leave along with flexible work arrangements, including the ability to work fully remote dependent on the duties of one’s job. All benefits are available to married same-sex or different-sex couples as well as domestic partners. In addition to its compensation and health benefits, Berkshire offers volunteer-time off, a matching-gift program, an employee assistance program, regular performance reviews, professional development and the You FIRST Fund to help employees impacted by personal financial hardships. Approximately 97% of employees are eligible for benefits.

TRAINING, DEVELOPMENT, ENGAGEMENT & RETENTION

Training and development programs provide employees with the knowledge and skills needed to succeed and have upward career mobility. They are critical components, along with competitive compensation and benefits programs, to having an engaged workforce. Ultimately an engaged workforce drives high levels of retention which reduces human capital risks, expense, and advances Berkshire’s progress and performance.

The Company provides several learning and training programs consistent with one’s job responsibilities, professional goals, and development plans. Employees have regular performance assessments to identify strengths and areas for further growth. Berkshire continues to reskill and upskill employees from across the Company helping them advance along career paths by taking on new responsibilities and roles. The Company offers a mentoring program for high potential junior employees along with leadership development programs. For employees looking to expand their professional experience in the classroom, the Company offers educational assistance along with access to formal degree and certification programs.

Berkshire continues to monitor the progress of its efforts to evaluate the effectiveness of programs and strategies on engagement. A comprehensive annual employee engagement and pulse survey is conducted to identify strengths and opportunity areas within the organization. Overall, employees felt there was a strong spirit of teamwork, that Berkshire genuinely cares for its communities, and they have strong relationships with their direct managers. Actions plans are developed for areas identified in the survey that do not meet the Company’s high expectations.

While Berkshire has been impacted by higher-than-average turnover due to labor market disruptions, it is ~~expanding~~seeing positive momentum because of the actions it has taken to improve engagement and combat turnover including:

•Launched Company-wide reward and recognition program

•Enhanced vacation benefit

•Introduced wellness day

•Enhanced line of business incentive plans

•Established career paths for various job families

•Increased starting wage

•Offered mentoring program

•Developed robust employee communications program

Collectively these efforts have led to improved retention year over year, historically high employee engagement and being named a Forbes America’s Best Midsize Employers.

Table of Contents

HEALTH & WELLNESS

As the world began to emerge from the COVID-19 pandemic Berkshire continued to proactively manage impacts to protect the health and safety of its employees, customers and communities. During the height of the pandemic, the Company provided protective equipment to front-line employees, including masks and gloves, and offered all additional paid sick time, paid vaccine time, paid quarantine/isolation leave, job protected personal leave, flexible work schedules for remote employees, premium pay for onsite employees and maintained full pay for employees with reduced schedules, as a result of the pandemic.

Berkshire works to protect and enhance the physical, mental and financial wellbeing of its workforce by providing programs, benefits and a health and wellness employee resource group. The Company, through its insurance provider, offers a fitness, weight and mind/body reimbursement along with a year-round calendar of various wellness related activities. Since physical and mental health go hand-in-hand with financial health, Berkshire provides access to financial education resources, webinars along with its You FIRST Fund to assist employees experiencing financial hardships. In addition, Berkshire provides a comprehensive employee assistance program which includes counseling services and resources for those experiencing mental health challenges. To further support the needs of its workforce, Berkshire introduced a wellness day to provide a day off for employees to disconnect, recharge and take care of themselves in whatever way works best for them.

FUTURE OF THE WORKPLACE

Berkshire continues to evolve and enhance its human capital management strategies to drive organizational growth in support of BEST while combating risks, such as the labor market shortage and rising labor costs. The Company expects to maintain its hybrid workplace over the long-term and invest in technology. While technology will play a bigger role in the future of Berkshire, helping to improve processes and drive efficiencies, people will always be at the core of its ability to deliver value to its customers, shareholders and communities. The Company remains confident that the Berkshire brand, value proposition and socially responsible vision will continue to be a differentiator in the market.


Human Capital*	◦Total Full Time Equivalent	1310
	◦Retention Rate	71%
	◦Promotion Rate	20%
	◦Minimum Starting Salary	$17/hour
	◦Average Tenure (years)	7

*All metrics reported are as of and for the year-ended December 31, 2022.

Table of Contents

DIVERSITY, EQUITY & INCLUSION

Creating a diverse, equitable, and inclusive (DEI) workplace is an essential enabler to continuing to drive forward progress on Berkshire’s Exciting Strategic Transformation (BEST), its BEST Community Comeback and vision. Ultimately Berkshire’s goal is to ensure that its workforce reflects the communities in which it operates, that its employees feel valued and can reach their full potential and that it improves the access and affordability of financial solutions to support economic growth of underrepresented populations and communities. The Company’s advances those goals through an integrated approach grounded in its corporate values:

•Strong oversight and governance practices

•Recruitment & talent management

•Education and training

•Workplace programming through employee resource groups (ERGs)

•Financial solutions which drive economic equity

•Community programming focused on financial inclusion and entrepreneurship

•Supplier diversity

The Company has a strong foundation of governance practices to ensure that diversity, equity and inclusion is embedded into Berkshire’s business activities. This includes the Corporate Responsibility & Culture Committee of the Board of Directors which has ultimate oversight responsibility. Berkshire’s Diversity, Equity & Inclusion Committee, which reports into the Board committee, provides additional management level oversight to the Company’s programming and performance. The Senior Vice President, Chief Diversity Officer manages the Company’s DEI programming.

Berkshire continues working to improve representation within its workplace through recruitment initiatives while enhancing its internal talent pipeline to ensure representation at all levels of the Company. Berkshire identifies opportunities in targeted markets and business lines, develops deeper partnerships with non-profit organizations and affinity groups, advertises positions on specialized career sites, participates in affinity career events and uses internal as well as external recruitment professionals to ensure it receives candidate pools that reflect the rural and urban communities in which it operates. It works to develop and implement strategies aimed at increasing representation at each level of the Company. In addition, the Company regularly reviews the gender and ethnic diversity of its workforce at the employee, manager and executive management level and completes a review of pay and performance measures to ensure that all employees, regardless of gender and ethnicity, in comparable roles are compensated equitably. As a result of Berkshire’s intentional and impactful efforts to date, Berkshire was listed in the Bloomberg Gender Equality Index and Human Rights Campaign’s Corporate Equality Index.


Diversity, Equity & Inclusion*	Percent of women in workforce	67	%
	Percent of ethnic minorities in workforce	13	%
	Percent of women on the Board	31	%
	Percent of ethnic minorities on the Board	31	%
	Percent of women in manager roles (officer+)	20	%
	Percent of ethnic minorities in manager roles (officer+)	4	%
	Percent of women in executive management roles	36	%
	Percent of ethnic minorities in executive management roles	14	%

*Workforce metrics reported are as of December 31, 2022. Board metrics reflect the current composition of the Board of Directors.

Berkshire provides a full suite of diversity, equity & inclusion trainings. The trainings help build understanding and provide employees with knowledge, skills and tactics they can put into practice. All new employees complete training at the time of hire and Berkshire intends to roll out enhancements to its training program which includes required annual and elective courses for all employees and hiring managers in 2023. In addition, Berkshire offers seven Employee Resource Groups (ERGs) each playing an integral role for employees and the culture of the company. Every Employee Resource Group provides a safe space for dialogue, education, and collective action on topics relevant to their members and the Company. Through the ERGs, employees concerns and ideas to strengthen Berkshire’s culture are elevated to members of management and the Diversity, Equity & Inclusion Committee for action, empowering employees to collectively be engines of positive change within the workplace and the broader community.

Table of Contents

The Company continues to work towards building economic equity in its communities by developing and offering safe, accessible, affordable financial solutions and programs including its MyFreedom Checking account, nationally certified by BankOn for its affordability, and the Futures Fund. The Futures Fund is a special purpose credit program which provides access to a low-interest, low barrier to entry line of credit in collaboration with non-profit partners who provide wrap around technical assistance to minority, LGBTQIA+ and other businesses owned by underrepresented individuals. Since launching the program in 2020, it has deployed nearly $1.5 million to underrepresented business owners. Beyond offering financial solutions and wellness programming, Berkshire also understands that a diverse third-party base is important to achieving its operational goals, supply chain resilience, vision and creating equity in its communities. As a result, Berkshire works to maintain a third-party base that reflects the communities in which it operates and, to the maximum extent possible, increase the utilization of third parties owned by underrepresented people.

Additional information on Berkshire’s Human Capital Management and Diversity, Equity & Inclusion practices can be found in the Company’s ~~other regions. The Group focuses on~~annual Corporate Responsibility Report, which details the ~~Bank’s distribution channels in order to broaden its retail~~company's environmental, social and ~~commercial customer base. The Company may consider acquisitions of insurance agencies in support of its growth strategy.~~governance programs.

~~Table of Contents~~

~~PERSONNEL~~

At year-end 2017, the Company had 1,992 full time equivalent employee positions -- an increase of 261 since the end of 2016, including positions added through the Commerce business combination and the impact of the First Choice integration in 2017. Commerce reported FTE staff of 226 positions shortly before the merger date. Berkshire continues to develop it’s staffing, including staff for new branches and hires related to team development. The Company has also developed staff with targeted skills to deepen the Company’s infrastructure. The Company’s employees are not represented by a collective bargaining unit.

SUBSIDIARY ACTIVITIES

The Company wholly-owns ~~two active consolidated subsidiaries: the Bank and~~ Berkshire ~~Insurance Group, Inc.~~Bank. The Bank operates as a commercial bank under a Massachusetts trust company charter. Berkshire ~~Insurance Group is incorporated in Massachusetts. Berkshire~~ Bank owns Firestone Financial, LLC which is a Massachusetts limited liability company, ~~First Choice Loan Services Inc. which is a New Jersey corporation,~~ as well as consolidated subsidiaries operated as Massachusetts securities ~~corporations.~~corporations and other subsidiary entities. The Company also owns all of the common stock of a Delaware statutory business ~~trust,~~trusts, Berkshire Hills Capital Trust I.I and SI Capital Trust II. The capital ~~trust is~~trusts are unconsolidated and ~~its~~their only material ~~asset is a $15 million~~assets are trust preferred ~~security~~securities related to the junior subordinated debentures reported in the Company’s Consolidated Financial Statements. Additional information about the subsidiaries is contained in Exhibit 21 to this report.

REGULATION AND SUPERVISION

The Company is a Delaware corporation and a bank holding company that has elected financial holding company status within the meaning of the Bank Holding Company Act of 1956, as amended. ~~As such, it~~It is registered with, supervised by and required to comply with the rules and regulations of the Federal Reserve Board. The Federal Reserve Board requires the Company to file various reports and also conducts examinations of the Company. The Company must receive the approval of the Federal Reserve Board to engage in certain transactions, such as acquisitions of additional banks and savings ~~associations.~~associations, and the Company must seek nonobjection for various capital actions, including stock repurchases.

The Bank is a Massachusetts-chartered trust company and its deposits are insured up to applicable limits by the FDIC. ~~The Bank was previously a Massachusetts-chartered savings bank and converted to a Massachusetts-chartered trust company in July 2014.~~ The Bank is subject to extensive regulation by the Massachusetts Commissioner of Banks (the “Commissioner”), as its chartering agency, and by the FDIC, as its deposit insurer. The Bank is required to file reports with the Commissioner and the FDIC concerning its activities and financial condition in addition to obtaining regulatory approvals prior to entering into certain transactions such as mergerswith, or acquisitions of, other depository institutions or branches of other institutions. Under specified conditions, the Bank must also seek regulatory approval of capital distributions to the Company, its sole shareholder.

The Commissioner and the FDIC conduct periodic examinations to test the Bank’s safety and soundness and compliance with various regulatory requirements. The regulatory structure gives the regulatory authorities extensive discretion in connection with supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of adequate loan loss reserves for regulatory purposes. Any change in such regulatory requirements and policies, whether by the Commissioner, the Massachusetts legislature, the FDIC, the Federal Reserve Board, or Congress, could have a material adverse impact on the Company, the Bank, and their operations.

~~Federal Legislation~~

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) was enacted in 2010. The Dodd-Frank Act has significantly changed the bank regulatory structure and is affecting the lending, investment, trading and operating activities

Table of ~~depository institutions and their holding companies.~~Contents

Many of the provisions of the Dodd-Frank Act are subject to delayed effective dates and/or require the issuance of implementing regulations. The regulatory process is ongoing and the impact on operations cannot yet be fully assessed. However, there is a significant expectation that the Dodd-Frank Act will, at a minimum, result in increased regulatory burden, compliance costs and interest expense for the Company and the Bank.

Certain regulatory requirements applicable to the Company ~~including certain changes made by~~and the ~~Dodd-Frank Act,~~Bank are referred to below. The description of statutory provisions and regulations applicable to financial institutions and their holding companies set forth in this Form 10-K does not purport to be a complete description of such statutes

~~Table of Contents~~

and regulations and their effects on the Company and is qualified in its entirety by reference to the actual laws and regulations. A summary of the regulatory requirements referred to below is as follows:

•Massachusetts Banking Laws and Supervision

•Federal Banking Regulations

•Enforcement

•Holding Company Regulation

•Mergers and Acquisitions

•Other Regulations

•Taxation

Massachusetts Banking Laws and Supervision

General. As a Massachusetts-chartered depository institution, the Bank is subject to various Massachusetts statutes and regulations which govern, among other things, investment powers, lending and deposit-taking activities, borrowings, maintenance of surplus and reserve accounts, distribution of earnings and payment of dividends. In addition, the Bank is subject to Massachusetts consumer protection and civil rights laws and regulations. The approval of the Commissioner is required for a Massachusetts-chartered institution to establish or close branches, merge with other financial institutions, issue stock, and undertake certain other activities.

Massachusetts law and regulations generally allow Massachusetts institutions to engage in activities permissible for federally chartered banks or banks chartered by another state. There is a 30-day notice procedure to the Commissioner in order to engage in such activities. Massachusetts law also authorized Massachusetts institutions to engage in activities determined to be “financial in nature,” or incidental or complementary to such a financial activity, subject to a 30-day notice to the Commissioner.

Dividends.Under Massachusetts law, the Bank may declare cash dividends from net profits not more frequently than quarterly and non-cash dividends at any time. No dividends may be declared, credited, or paid if the institution’s capital stock is impaired. An institution with outstanding preferred stock may not, without the prior approval of the Commissioner, declare dividends to the common stock without also declaring dividends to the preferred stock. The approval of the Commissioner is generally required if the total of all dividends declared in any calendar year exceeds the total of its net profits for that year combined with its retained “net profits,” as defined, of the preceding two years. The Bank was required to obtain the approval of the Commissioner to pay Bank dividends to the Company in 2022 and is expected to require such approval in 2023.

Loans to One Borrower Limitations. Massachusetts banking law grants broad lending authority. However, with certain limited exceptions, total obligations of one borrower to an institution may not exceed 20.0% of the total of the institution’s capital, which is defined under Massachusetts law as the sum of the institution’s capital stock, surplus account and undivided profits.

~~Investment Activities.~~ In general, Massachusetts-chartered institutions may invest in preferred and common stock of any corporation organized under the laws of the United States or any state provided such investments do not involve control of any corporation and do not, in the aggregate, exceed 4.0% of the bank’s deposits. Massachusetts-chartered institutions may also invest an amount equal to 1.0% of their deposits in stocks of Massachusetts corporations or companies with substantial employment in Massachusetts which have pledged to the Commissioner that such monies will be used for further development within the Commonwealth. However, these powers are constrained by federal law, which generally limit the activities and equity investments of state banks to those permitted for national banks.

Regulatory Enforcement Authority. Any Massachusetts-chartered institution that does not operate in accordance with the regulations, policies, and directives of the Commissioner may be sanctioned for non-compliance, including seizure of the property and business of the institution and suspension or revocation of its charter. The Commissioner may, under certain circumstances, suspend or remove officers or directors who have violated the law, conducted the institution’s business in a manner which is unsafe, unsound or contrary to the ~~depositors~~depositors’ interests, or been negligent in the performance of their duties. In addition, upon finding that an institution has engaged in an unfair or deceptive act or practice, the Commissioner may issue an order to cease and desist and impose a fine on the institution concerned. Finally, Massachusetts consumer protection and civil rights statutes applicable to the Bank permit private individual and class action lawsuits and provide for the rescission of consumer transactions, including loans, and the recovery of statutory and punitive damage and attorney’s fees in the case of certain violations of those statutes.

Massachusetts has other statutes or regulations that are similar to the federal provisions discussed below.

Table of Contents

Federal Regulations

Capital Requirements. Federal regulations require FDIC insured depository institutions to meet several minimum capital standards: a common equity Tier 1 capital to risk-based assets ratio of 4.5%, a Tier 1 capital to risk-based assets ratio of 6.0%, a total capital to risk-based assets of 8.0%, and a 4.0% Tier 1 capital to total assets leverage ratio. The ~~existing~~definitions of these capital ~~requirements were effective January 1, 2015~~categories and the ratio metrics are ~~the result of a final rule implementing regulatory amendments based on recommendations of the Basel Committee on Banking Supervision and certain requirements of the Dodd-Frank Act.~~

Common equity Tier 1 capital is generally defined as common stockholders’ equity and retained earnings. Tier 1 capital is generally defined as common equity Tier 1 and additional Tier 1 capital. Additional Tier 1 capital includes certain noncumulative perpetual preferred stock and related surplus and minority interestsset out in equity accounts of consolidated subsidiaries. Total capital includes Tier 1 capital (common equity Tier 1 capital plus additional Tier 1capital) and Tier 2 capital. Tier 2 capital is comprised of capital instruments and related surplus, meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated debt. Also included in Tier 2 capital is the allowance for loan and lease losses limited to a maximum of 1.25% of risk-weighted assets and, for institutions that have exercised an opt-out election regarding the treatment of accumulated other comprehensive income (“AOCI”), up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values. The Bank chose the opt-out election. Calculation of all types of regulatory capital is subject to deductions and adjustments specified in thefederal regulations.

In determining the amount of risk-weighted assets for purposes of calculating risk-based capital ratios, all assets, including certain off-balance sheet assets (e.g., recourse obligations, direct credit substitutes, residual interests) are multiplied by a risk weight factor assigned by the regulations based on the risks believed inherent in the type of asset. Higher levels of capital are required for asset categories believed to present greater risk. For example, a risk weight of 0% is assigned to cash and U.S. government securities, a risk weight of 50% is generally assigned to prudently underwritten first lien one to four-family residential mortgages, a risk weight of 100% is assigned to commercial and consumer loans, a risk weight of 150% is assigned to certain past due loans and a risk weight of between 0% and 600% is assigned to permissible equity interests, depending on certain specified factors.

In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted asset above the amount necessary to meet its minimum risk-based capital requirements. The capital conservation buffer requirement is being phased in beginning January 1, 2016 at 0.625% of risk-weighted assets and increasing each year until fully implemented at 2.5% on January 1, 2019. During the 2017 calendar year, the capital conservation buffer was 1.275%. The buffer increased to 1.875% on January 1, 2018.

In assessing an institution’s capital adequacy, the FDIC takes into consideration not only these numeric factors, but qualitative factors as well, and has the authority to establish higher capital requirements for individual institutions where deemed necessary. As a bank holding company, the Company is also subject to regulatory capital requirements, as described in a subsequent section.

The approval of the FDIC is required for the Bank to pay a dividend to the Company from its surplus account. FDIC approval was required for Bank dividends payments in 2022 and such approval is expected to be required in 2023.

Investment Activities. The Federal Deposit Insurance Act generally limits the types of equity investments an FDIC-insured state-chartered bank, such as the Bank, may make and the kinds of activities in which such a bank may engage, as a principal, to those that are permissible for national banks.

Interstate Banking and Branching. Federal law permits an institution, such as the Bank, to acquire another institution by merger in a state other than Massachusetts unless the other state has opted out. Federal law, as amended by the Dodd-Frank Act, authorizes de novo branching into another state to the extent that the target state allows its ~~state chartered~~state-chartered banks to establish branches within its borders. ~~The~~As of December 31, 2022, the Bank ~~operates~~operated branches in New York, Vermont, Connecticut ~~New Jersey,~~ and ~~Pennsylvania~~Rhode Island, as well as Massachusetts. At its interstate branches, the Bank may conduct any activity authorized under Massachusetts law that is permissible either for an institution chartered in that state (subject to applicable federal restrictions) or a branch in that state of an out-of-state national bank. The New York State Superintendent of Banks, the Vermont Commissioner of Banking and Insurance, the Connecticut Commissioner of Banking ~~the New Jersey Commissioner of Banking and Insurance~~ and the ~~Pennsylvania Secretary~~Director of ~~Banking and Securities~~the Rhode Island Department of Business Regulation may exercise certain regulatory authority over the Bank’s branches in their respective states.

~~Table of Contents~~

Prompt Corrective Regulatory Action. Federal law requires that federal bank regulatory authorities take “prompt corrective action” with respect to banks that do not meet minimum capital requirements. ~~For this purpose, the~~

The law establishes three categories of capital deficient institutions: undercapitalized, significantly undercapitalized, and critically undercapitalized. The FDIC regulations implementing the prompt corrective action law were amended to incorporate the previously discussed increased regulatory capital standards that were effective January 1, 2015. An institution is deemed to be “well capitalized” if it has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, a leverage ratio of 5.0% or greater, and a common equity Tier 1 ratio of 6.5% or greater. An institution is “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a leverage ratio of 4.0% or greater, and a common equity Tier 1 ratio of 4.5% or greater. An institution is “undercapitalized” if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a leverage ratio of less than 4.0%, or a common equity Tier 1 ratio of less than 4.5%. An institution is deemed to be “significantly undercapitalized” if it has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 4.0%, a leverage ratio of less than 3.0%, or a common equity Tier 1 ratio of less than 3.0%. An institution is considered to be “critically undercapitalized” if it has a ratio of tangible equity (as defined in the regulations) to total assets that is equal to or less than 2.0%.

“Undercapitalized” banks must adhere to growth, capital distribution (including dividend), and other limitations and are required to submit a capital restoration plan. A bank’s compliance with such plans must be guaranteed by its holding company in an amount equal to the lesser of 5% of the institution’s total assets when deemed “undercapitalized” or the amount needed to comply with regulatory capital requirements. If an “undercapitalized”

Table of Contents

bank fails to submit an acceptable plan, it is treated as if it is “significantly undercapitalized.” “Significantly undercapitalized” banks must comply with one or more of a number of additional restrictions, including but not limited to an order by the FDIC to sell sufficient voting stock to become “adequately capitalized,” requirements to reduce assets and cease receipt of deposits from correspondent banks or dismiss directors or officers, and restrictions on interest rates paid on deposits, compensation of executive officers, and capital distributions by the holding company. “Critically undercapitalized” institutions must comply with additional sanctions including, subject to a narrow exception, the appointment of a receiver or conservator within 270 days after it obtains such status.

At December 31, ~~2017,~~2022, the Bank met the criteria for being considered “well capitalized” as defined in the prompt corrective action regulations.

Transactions with Affiliates and Loans to Insiders. Transactions between depository institutions and their affiliates are governed by Sections 23A and 23B of the Federal Reserve Act. In a holding company context, at a minimum, the parent holding company of an institution and any companies which are controlled by the holding company are affiliates of the institution. Generally, Section 23A limits the extent to which the institution or its subsidiaries may engage in “covered transactions,” such as loans, with any one affiliate to 10% of such institution’s capital stock and surplus. There is also an aggregate limit on all such transactions with all affiliates to 20% of capital stock and surplus. Loans to affiliates and certain other specified transactions must comply with specified collateralization requirements. Section 23B requires that transactions with affiliates be on terms that are no less favorable to the institution or its subsidiary as similar transactions with non-affiliates.

Federal law also restricts an institution with respect to loans to directors, executive officers, and principal stockholders (“insiders”). Loans to insiders and their related interests may not exceed, together with all other outstanding loans to such persons and affiliated entities, the institution’s total capital and surplus. Loans to insiders above specified amounts must receive the prior approval of the Board of Directors. Further, loans to insiders must be made on terms substantially the same as offered in comparable transactions to other persons, except that such insiders may receive preferential loans made under a benefit or compensation program that is widely available to the institution’s employees and does not give preference to the insider over the employees. Federal law places additional limitations on loans to executive officers. Massachusetts law previously had a separate law regarding insider transactions, but that law was amended in 2015 to generally incorporate the federal restrictions.

~~Table of Contents~~

Insurance of Deposit Accounts. The Bank’s deposit accounts are insured by the Deposit Insurance Fund of the FDIC up to applicable limits. The FDIC insures deposits up to the standard maximum deposit insurance amount (“SMDIA”) of $250,000.

The FDIC charges insured depository institutions premiums to maintain the Deposit Insurance Fund. ~~The Dodd-Frank Act required the FDIC to revise its procedures to base its assessments upon each insured institution’s total assets less tangible equity instead of deposits.~~

Under the ~~FDIC’s~~ risk-based assessment system, ~~insured institutions are assessed based on perceived risk to the Deposit Insurance Fund with~~ institutions deemed less risky of failure pay lower ~~FDIC~~ assessments. ~~Effective July 1, 2016, assessments~~Assessments for ~~most~~ institutions of less than $10 billion of assets are based on financial measures and supervisory ratings derived from statistical modeling estimating the probability of an institution’s failure within three years. The assessment range (inclusive of possible ~~adjustments) was reduced to 1.5 basis points to 30 basis points~~adjustments specified by the regulations) for institutions ~~of less than $10 billion in total assets, also effective July 1, 2016. The Dodd-Frank Act required that banks of~~with greater than $10 billion ~~in assets bear the burden of raising the Deposit Insurance Fund reserve ratio from 1.15% to 1.35%. Such institutions are now subject to an annual surcharge of 4.5 basis points~~ of total assets ~~exceeding $10 billion. This surcharge will remain~~was 1.5 to 40 basis points effective through December 31, 2022. The FDIC has authority to increase insurance assessments and adopted a final rule in ~~place until~~October 2022 to increase initial base deposit insurance assessment rates by two basis points beginning in the ~~earlier~~first quarterly assessment period of 2023. As a result, effective January 1, 2023, assessment rates for institutions of the ~~Deposit Insurance Fund reaching the 1.35% ratio or December 31, 2018, at which point a shortfall assessment would be applied.~~

~~FDIC insured institutions are also required~~Bank’s size will range from 2.5 to pay assessments to the FDIC to fund interest payments on bonds issued by the Financing Corporation, an agency of the federal government established to recapitalize a predecessor deposit insurance fund. These assessments will continue until the Financing Corporation bonds mature in 2017 through 2019. The assessment rate is adjusted quarterly to reflect changes in the assessment base of the fund. For the quarter ended December 31, 2017, the Financing Corporation assessment amounted to 0.5442 basis ~~points of total assets less Tier 1 capital.~~

points.

Insurance of deposits may be terminated by the FDIC upon a finding that the institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by a regulator. Management does not know of any practice, condition or violation that might lead to termination of FDIC deposit insurance.

The FDIC has authority to increase insurance assessments. A significant increase in insurance premiums would likely have an adverse effect on the operating expenses and results of operations of the Bank. Management cannot predict what insurance assessment rates will be in the future.

Table of Contents

Federal Home Loan Bank System. The Bank is a member of the Federal Home Loan Bank system, which consists of 12 regional Federal Home Loan Banks that provide a central credit facility primarily for member institutions. The Bank, as a member, is required to acquire and hold shares of capital stock in the FHLBB.

The Federal Home Loan Banks are required to provide funds for certain purposes including contributing funds for affordable housing programs. These requirements, and general financial results, could reduce the amount of dividends that the Federal Home Loan Banks pay to their members and result in the Federal Home Loan Banks imposing a higher rate of interest on advances to their members. Historically, the FHLBB has paid dividends to member banks based on money market rates.

Enforcement

The FDIC has primary federal enforcement responsibility over ~~state chartered~~state-chartered banks that are not members of Federal Reserve System, which includes the Bank. The FDIC has authority to bring enforcement actions against such institutions and their “institution-related parties,” including officers, directors, certain shareholders, and attorneys, appraisers and accountants who knowingly or recklessly participate in wrongful action likely to have an adverse effect on an insured institution. Formal enforcement action may range from the issuance of a capital directive or cease and desist order to removal of officers and/or directors of the institution or receivership or conservatorship in certain circumstances. Potential civil money penalties cover a wide range of violations and actions, and are adjusted annually for inflation. Such penalties currently range up to ~~$25~~more than $50 thousand per day or, in extreme cases, as high as ~~$1.0~~$2 million per day.

~~Table of Contents~~

Holding Company Regulation

General. The Company is subject to examination, regulation, and periodic reporting as a bank holding company under the Bank Holding Company Act of 1956, as amended. The Company is required to obtain the prior approval of the Federal Reserve Board to acquire all, or substantially all, of the assets of any other bank or bank holding company. Prior Federal Reserve Board approval would be required for the Company to acquire direct or indirect ownership or control of any voting securities of any bank or bank holding company if, after such acquisition, it would, directly or indirectly, own or control more than five percent of any class of voting shares of the bank or bank holding company.

A bank holding company is generally prohibited from engaging in non-banking activities, or acquiring direct or indirect control of more than five percent of the voting securities of any company engaged in non-banking activities. The Federal Reserve Board has allowed by regulation some exceptions based on activities closely related to banking including: (i) making or servicing loans; (ii) performing certain data processing services; (iii) providing discount brokerage services; (iv) acting as fiduciary, investment or financial advisor; and (v) acquiring a savings and loan association whose direct and indirect activities are limited to those permitted for bank holding companies.

The Gramm-Leach-Bliley Act of 1999 authorized a bank holding company that meets specified conditions, including being “well capitalized” and “well managed” as defined in the regulations, to opt to become a “financial holding company” and thereby engage in a broader array of financial activities. Such activities can include insurance and investment banking. The Company has elected to become a financial holding company.

The Company is subject to the Federal Reserve Board’s capital adequacy requirements for bank holding companies. The Dodd-Frank Act required the Federal Reserve Board to promulgate consolidated capital requirements for depository institution holding companies that are no less stringent, both quantitatively and in terms of components of capital, than those applicable to institutions themselves. ~~The previously discussed final rule regarding regulatory capital requirements implemented the Dodd-Frank Act as to bank holding company capital standards.~~ Consolidated regulatory capital requirements identical to those applicable to the Bank ~~applied~~apply also to the ~~Company, effective January 1, 2015. As is the case with institutions themselves, the capital conservation buffer is being phased in between 2016 and 2019.~~Company.

Federal Reserve Board policy requires that a bank holding company serve as a source of financial strength to its subsidiary banks by standing ready to use available resources to provide adequate capital funds to those banks during periods of financial stress or adversity and by maintaining the financial flexibility and capital-raising capacity to obtain additional resources for assisting its subsidiary banks where necessary. The Dodd-Frank Act codified the source of strength doctrine.

Table of Contents

The Federal Reserve Board has issued a policy statement regarding the payment of dividends and the repurchase of shares of common stock by bank holding companies. In general, the policy provides that dividends should be paid only out of current earnings and only if the prospective rate of earnings retention by the holding company appears consistent with the organization’s capital needs, asset quality and overall financial condition. Regulatory guidance provides for prior ~~regulatory~~ consultation with and nonobjection of the Federal Reserve Board with respect to dividends in certain circumstances, such as where the company’s net income for the past four quarters, net of ~~dividends’~~dividends previously paid over that period, is insufficient to fully fund the dividend or the company’s overall rate of earnings retention is inconsistent with the company’s capital needs and overall financial condition. The Federal Reserve Board guidance also provides for consultation and nonobjection for material increases in the amount of a bank holding company’s common stock dividend. The ability of a holding company to pay dividends may be restricted if a subsidiary bank becomes undercapitalized.

Federal regulations require a bank holding company to give the Federal Reserve Board prior written notice of any repurchase or redemption of then outstanding equity securities if the gross consideration for the repurchase or redemption, when combined with the net consideration paid for all such repurchases or redemptions during the preceding 12 months, is equal to 10% or more of the company’s consolidated net worth. The Federal Reserve Board may disapprove such a purchase or redemption under certain circumstances. There is an exception to this approval requirement for well-capitalized bank holding companies that meet certain other conditions. Federal Reserve ~~policy~~guidance provides for regulatory consultation and nonobjection under specified circumstances prior to a holding company redeeming or repurchasing regulatory capital instruments, ~~under specified circumstances~~including common stock, regardless of the applicability of the previously referenced notification requirement.Pursuant to regulatory policies, such circumstances include repurchasing common stock that would result in a net reduction as of the end of the quarter in the amount of such equity instruments outstanding compared with the beginning of the quarter. In these circumstances, Federal Reserve nonobjection is required. The Company obtained such nonobjection for its repurchase program in 2022 and for the repurchase program announced in January 2023.

~~Table of Contents~~

These regulatory policies could affect the ability of the Company to pay dividends, repurchase shares of its stock, or otherwise engage in capital distributions.

The status of the Company as a registered bank holding company under the Bank Holding Company Act does not exempt it from certain federal and state laws and regulations applicable to corporations generally, including, without limitation, certain provisions of the federal securities laws.

Acquisition of the Company. Under the Change in Bank Control Act, no person may acquire control of a bank holding company such as the Company unless the Federal Reserve Board has been given 60 days’ prior written notice and has not issued a notice disapproving the proposed acquisition, taking into consideration certain factors, including the financial and managerial resources of the acquirer and the competitive effects of the acquisition. Control, as defined ~~under federal law,~~for this purpose, means ownership, control of or ~~holding irrevocable proxies representing~~power to vote 25% or more ~~than 25%~~ of any class of voting stock, control in any manner of the election of a majority of the company’s directors, or a determination by the regulator that the acquirer has the power to direct, or directly or indirectly to exercise a controlling influence over, the management or policies of the institution.stock. Acquisition of more than 10% of any class of a bank holding company’s voting stock constitutes a rebuttable presumption of control under the regulations under certain circumstances including where, is the case with the Company, the issuer has registered securities under Section 12 of the Securities Exchange Act of 1934.

Massachusetts Holding Company Regulation. In addition to the federal holding company regulations, a bank holding company organized or doing business in Massachusetts must comply with requirements under Massachusetts law. Approval of the Massachusetts regulatory authorities is generally be required for the Company to acquire 25 percent or more of the voting stock of another depository institution. Similarly, prior regulatory approval would be necessary for any person or company to acquire 25 percent or more of the voting stock of the Company.

Table of Contents

Mergers and Acquisitions

The Company and the Bank have authority to engage, and have engaged, in acquisitions of other depository institutions. Such transactions are subject to a variety of conditions including, but not limited to, required stockholder approvals and the receipt of all necessary regulatory approvals. Necessary regulatory approvals include those required by the federal Bank Holding Company Act and/or Bank Merger Act, Massachusetts law and, if the target institution is located in a state other than Massachusetts, the law of that state. When considering merger applications, the federal regulators must evaluate such factors as the financial and managerial resources and future prospects of the parties, the convenience and needs of the communities to be served (including performance of the parties under the Community Reinvestment Act), competitive factors, any risk to the stability of the United States banking or financial system and the effectiveness of the institutions involved in combating money laundering activities. Both the Bank Holding Company Act and the Bank Merger Act provide for a waiting period of 15 to 30 days following approval by the federal banking regulator within which the United States Department of Justice may file objections to the merger under the federal antitrust laws. Massachusetts law requires the Commissioner (or Board of Bank Incorporation in certain cases) to consider such factors as whether competition among banking institutions will be unreasonably affected and whether public convenience and advantage will be promoted (including whether the merger will result in net new benefits).

~~Table of Contents~~

Other Regulations

Consumer Protection Laws. The Bank is subject to federal and state consumer protection statutes and regulations applicable to depository institutions. These include the Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; Home Mortgage Disclosure Act, requiring financial institutions to provide certain information about home mortgage and refinance loans; the Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; the Fair Credit Reporting Act, governing the provision of consumer information to credit reporting agencies and the use of consumer information; the Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; and the Electronic Funds Transfer Act, governing automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services. Since the Bank has exceeded $10 billion of consolidated assets, compliance with such federal consumer protection statutes and regulations is examined for and enforced by the Consumer Finance Protection Bureau rather than the FDIC.

The Bank also is subject to Massachusetts and federal laws protecting the confidentiality of consumer financial records, and limiting the ability of the institution to share non-public personal information with third parties.

The Community Reinvestment Act (“CRA”) establishes a requirement for federal banking agencies that, in connection with examinations of depository institutions within their jurisdiction, the agencies evaluate the record of the depository institutions in meeting the credit needs of their local communities, including low- and moderate-income neighborhoods, consistent with the safe and sound operation of those institutions. These factors are also considered in evaluating mergers, acquisitions and applications to open a branch or new facility. Under the CRA, institutions are assigned a rating of “outstanding,” “satisfactory,” “needs to improve,” or “substantial non-compliance.” A less than “satisfactory” rating would result in the suspension of any growth of the Bank through acquisitions or opening de novo branches until the rating is improved. As of the most recent CRA examination by the FDIC, the Bank’s CRA rating was “satisfactory.” On May 5, 2022, the OCC, FRB and FDIC released a notice of proposed rulemaking to strengthen and modernize the CRA regulations and framework.

Anti-Money Laundering Laws. The Bank is subject to extensive anti-money laundering provisions and requirements, which require the institution to have in place a comprehensive customer identification program and an anti-money laundering program and procedures. These laws and regulations also prohibit depository institutions from engaging in business with foreign shell banks; require depository institutions to have due diligence procedures and, in some cases, enhanced due diligence procedures for foreign correspondent and private banking accounts; and improve information sharing between depository institutions and the U.S. government. The Bank has established policies and procedures intended to comply with these provisions.

Table of Contents

Taxation

The Company reports its income on a calendar year basis using the accrual method of accounting. This discussion of tax matters is only a summary and is not a comprehensive description of the tax rules applicable to the Company and its subsidiaries. Further discussion of income taxation is contained in ~~Note 15 - Income Taxes of~~a note to the ~~Consolidated Financial Statements.~~financial statements. The federal income tax laws apply to the Company in the same manner as to other corporations with some exceptions. The Company may exclude from income 100 percent of dividends received from the Bank and from Berkshire Insurance Group as members of the same affiliated group of corporations. The Company reports income on a calendar year basis to the Commonwealth of Massachusetts. Massachusetts tax law generally permits special tax treatment for a qualifying limited purpose “securities corporation.” The Bank’s securities corporations all qualify for this treatment, and are taxed at a 1.3% rate on their gross income.

Inflation Reduction Act of 2022.The Inflation Reduction Act, which was signed into law on August 16, 2022, among other things, implements a new alternative minimum tax of 15% on corporations with profits in excess of $1 billion, a 1% excise tax on stock repurchases, and several tax incentives to promote clean energy and climate initiatives. These provisions are effective beginning January 1, 2023.

Table of Contents

ITEM 1A. RISK FACTORS

The risks set forth below, in addition to the other risks described in this Annual Report on Form 10-K, may adversely affect the Company's business, financial condition, strategic objectives, and operating results. In addition to the risks set forth below and the other risks described in this annual report, there may ~~also~~ be additional risks and uncertainties that are not currently known to the Company or that the Company currently deems to be immaterial that could materially and adversely affect the Company's business, financial condition, strategic objectives, or operating results. As a result, past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods. Further, to the extent that any of the information contained in this Annual Report on Form 10-K constitutes forward-looking statements, the risk factors set forth below also are cautionary statements identifying important factors that could cause actual results to differ materially from those expressed in any forward-looking statements made by or on behalf of the Company.

The COVID-19 global pandemic affected all aspects of the Company’s business since 2020. The impact of the pandemic is discussed in the "Operating" risk factors below, but it should be understood as affecting the overall risk environment and risk factors of the Company.

Risk Factors Summary

Lending Risks

•Deterioration in the Housing Sector, Commercial Real Estate, and Related Markets May Adversely Affect Business and Financial Results.

•The Company’s Emphasis on Commercial Lending May Expose the Company to Increased Lending Risks, Which Could Hurt Profits.

•The Company is Subject to a Variety of Risks in Connection With Any Sale of Loans it May Conduct.

•The Company is Exposed to Risk of Environmental Liability When It Takes Title to Property.

•New Third Party Lending Relationships and Sourcing Channels May Increase Lending Risk

Operating Risks

•Public Health Emergencies Like the COVID-19 Pandemic May Adversely Affect, the Company’s Business, Financial Condition, Liquidity, and Results of Operations.

•The Company is Subject to Security and Operational Risks Relating to the Use of Technology that Could Damage the Company's Reputation and Business.

•The Company Faces Cybersecurity Risks, Including Denial of Service Attacks, Ransomware, Hacking and Identity Theft that Could Result in the Disclosure of Confidential Information or the Creation of Unauthorized Transactions, Which Could Adversely Affect the Company’s Business or Reputation and Create Significant Legal and Financial Exposure.

•Counterparties and Correspondents Expose the Company to Risks.

•The Company’s Business is Reliant on Outside Vendors.

•Tailoring The Bank's Delivery Model to Respond to Customer Preferences in Banking May Negatively Affect Earnings

•Development of New Products and Services May Impose Additional Costs on the Company and May Expose It to Increased Operational Risk.

•The Discontinuation of LIBOR and the Transition to an Alternative Reference Rate Could Adversely Impact the Company’s Business and Results of Operations.

Table of Contents

Liquidity Risks

•The Company's Wholesale Funding Sources May Prove Insufficient to Replace Deposits at Maturity and Support Operations and Future Growth.

•The Company's Ability to Service Our Debt, Pay Dividends, and Otherwise Pay Obligations as They Come Due Is Substantially Dependent on Capital Distributions from the Bank, and These Distributions Are Subject to Regulatory Limits and Other Restrictions. The Company’s Stock Repurchase Program is also Dependent on These Distributions.

•The Loss Recorded in 2020 May Have an Adverse Effect on Future Dividend Payments to Common Shareholders.

•Secondary Mortgage Market Conditions Could Have a Material Impact on the Company’s Financial Condition and Results of Operations.

Interest Rate Risks

•Market Interest Rate Conditions Could Adversely Affect Results of Operations and Financial Condition.

Securities Market Value Risks

•Declines in the Value of Certain Investment Securities Could Require Write-Downs, Which Would Reduce Earnings.

Regulatory Matters Risks

•Legislative and Regulatory Initiatives May Affect Business Activities and Increase Operating Costs.

•Provisions of the Company's Certificate of Incorporation, Bylaws, and Delaware Law, as Well as State and Federal Banking Regulations, Could Delay or Prevent a Takeover of Us by a Third Party.

Significant Accounting Estimates Risks

•Various Factors May Cause Our Allowance for Credit Losses on Loans to Increase.

•Fair Value Measurements May Be Affected by Inherent Uncertainties

Trading of the Company's Common Stock

•The Trading History of the Company’s Common Stock is Characterized By Low Trading Volume. The Value of Shareholder Investments May be Subject to Sudden Decreases Due to the Volatility of the Price of the Common Stock.

Lending

Deterioration in the Housing Sector, Commercial Real Estate, and Related Markets May Adversely Affect Business and Financial Results.

Real estate lending is a major business activity for the Company. Real estate market conditions affect the value and marketability of real estate collateral, and they also affect the cash flows, liquidity, and net worth of many borrowers whose operations and finances depend on real estate market conditions. We have a geographic concentration of loans in our market areas. Adverse conditions in the Company's market areas could reduce growth rates, affect the ability of our customers to repay their loans and increase loan losses, and generally affect the Company's financial condition and results of operations. Potential increases in interest rates could increase capitalization rates which could adversely affect commercial property appraisals and collateral value. Residential property values may be similarly adversely impacted.Pandemic impacts on the supply and demand of residential properties have caused unusual price appreciation in many markets, which may not be sustained if market conditions normalize.

Table of Contents

The Company’s Emphasis on Commercial Lending May Expose the Company to Increased Lending Risks, Which Could Hurt Profits.

The Company emphasizes commercial lending, which generally exposes the Company to a greater risk of nonpayment and loss because repayment of such loans often depends on the successful operations and income stream of the borrowers. Commercial loans are historically more susceptible to delinquency, default, fraud, and loss during economic downturns. Commercial lending involves larger loan sizes and larger relationship exposures, with greater potential impact on profits in the event of adverse loan performance. The majority of the Company’s commercial loans are secured by real estate and subject to the previously discussed real estate risk ~~factors.~~ ~~Geographic~~factors, as well as risks specific to individual properties and property types. Recent expansion of the commercial lending team may ~~result in new risks not identified by~~expose the Company ~~or which it is unfamiliar~~to new markets and risks if new lenders are not integrated with ~~monitoring or resolving. Recent expansion has been focused on~~ the ~~Greater Boston market, where the Bank may be financing projects with larger loan amounts~~Company’s policies, controls, and ~~where the Bank has less experience than in its traditional market areas and where competition may result in different lending structures.~~procedures.

The Company is ~~subject~~Subject to a ~~variety~~Variety of ~~risks~~Risks in ~~connection with any sale~~Connection With Any Sale of Loans it May Conduct.

The Company routinely sells newly originated residential mortgage loans itand SBA guaranteed business loans, and may ~~conduct.~~

~~In connection with the Company’s sale of one~~also sell other loans or ~~more loan portfolios, it~~loans portfolios. It may make certain representations and warranties to the purchaser concerning the loans sold and the procedures under which those loans have been originated and serviced. If any of these representations and warranties are invalid, the Company may be required to refund premiums, indemnify the purchaser for any related costs or losses, or it may be required to repurchase part or all of the affected loans, which may be impaired. The Company may also be required to repurchase loans as a result of borrower fraud or in the event of early payment default by the borrower on a loan it has sold. The Company’s ability to maintain seller/servicer relationships with government agencies and government backed entities may be jeopardized in the event of the emergence of one or more of the above risks. Demand for the Company’s loans in the secondary markets could also be affected by these risks, which could lead to a reduction in related business activities.

The Company ~~may be required~~is Exposed to ~~reduce the value~~Risk of ~~any loans it marks as held for sale, which could adversely affect its results of operations.~~Environmental Liability When It Takes Title to Property.

~~The Company is exposed to risk of environmental liability when it takes title to property.~~In the course of its business, the Company may foreclose on and take title to real estate. As a result, the Company could be subject to environmental liabilities with respect to these properties for property damage, personal injury, investigation and clean-up costs. The costs associated with investigation or remediation activities could be substantial. The Company

~~Table of Contents~~

may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from the property.

New Third Party Lending Relationships and Sourcing Channels May Increase Lending Risk.

The Company is expanding its lending sourcing channels, including a residential mortgage channel with local correspondents, partnering with fintech online lenders, and expanding its commercial loan sourcing channels.It is also relying more on third party loan servicing. These activities may increase the underwriting risks and loan administration risks in managing its lending activities.

Operating

~~Expansion, Growth, and Acquisitions Could Negatively Impact Earnings If Not Successful.~~

~~The Company plans to grow organically, by geographic expansion, through business line expansion, and through acquisitions. Successful expansion depends on~~Public Health Emergencies Such as the maintenance and development of an adequate infrastructure. Success also depends on customer acceptance and the long-term recruitment and retention of key personnel and acquired customer relationships. Profitability depends on whether the income generated will offset the increased operating expenses. The Company implemented certain expense restructuring activities, related in part to the rationalization of acquired operations. Changes in operations may result in inefficiencies or control deficiencies.

Merger and acquisition activities are subject to a number of risks, including lending, operating, and integration risks. Such growth requires careful due diligence, evaluation of risks, and projections of future operations and financial conditions. Adverse developments could have a material adverse effect on the Company's financial condition and results of operations. Acquisitions often involve extensive merger agreements, which may lead to litigation risks or operating constraints.

The Company has recruited executive and business line management to support its growth and expansion, and it has absorbed management of acquired operations. This involves retention risks, operating risks, and financial risks. Such recruitment can affect the retention of new and old business, and can also be affected by competitive reactions and other relationship risks in retaining accounts. The relocation of the Company’s headquarters may affect operational functioning.

Regulatory examinations may identify matters requiring attention. Deficiencies related to regulatory compliance may result in changes that affect operating revenues and costs, including the scope or scale of business activities and/or potential future expansion initiatives. The Company has crossed the $10 billion threshold for additional Dodd Frank regulatory requirements. These regulations affect revenues and operating costs, and introduce additional compliance requirements. If targeted earnings accretion is not achieved, some profitability metrics may be reduced. The Company may also face additional acquisition approval requirements, and growth plans could be slowed if expected approvals are not obtained.

~~Competition From Financial Institutions and Other Financial Service Providers~~COVID-19 Pandemic May Adversely Affect, the Company’s ~~Growth~~Business, Financial Condition, Liquidity, and ~~Profitability.~~Results of Operations.

~~Competition~~The COVID-19 pandemic has negatively impacted the U.S. and global economy; disrupted U.S. and global supply chains and labor markets; created significant volatility and disruption in financial markets; impacted rates and yields on U.S. Treasury securities; resulted in increased credit risk in certain industries; increased demands on capital and liquidity; and affected employment wages, consumer confidence, and inflation. In addition, the pandemic has resulted in temporary closures and curtailment of individual and business activities in our footprint. The pandemic has resulted in increases in the ~~banking~~Company's allowance for credit losses and the recognition of impairment of our goodwill. Some of the risks the Company faces from the pandemic include, but are not limited to: the health and availability of our colleagues, the supply of labor, inflationary impacts on operating costs, the financial ~~services industry is intense. Larger banking institutions have substantially greater resources~~condition of our clients and ~~lending limits and may offer certain services not offered by~~ the Company. Local competitors with excess capital may accept lower returns on new business. There is increased competition by out-of-market competitors through the internet and mobile technology. Federal regulations and financial support programs may in some cases favor competitors. Competition includes competition for banking teams and talent. Competition creates risk that revenues, earnings, or market share could be adversely affected by the loss of talent.

~~Market Changes May Adversely Affect Demand For The Company’s Services and Impact Revenue, Costs, and Earnings.~~

~~Channels for servicing the Company’s customers are evolving rapidly, with less reliance on traditional branch facilities, more use of online and mobile banking, and~~ demand for ~~universal bankers~~our products and services, changes in interest rates, recognition of credit losses and increases in the allowance for credit losses, impactsif customers draw on their lines of credit or draw down deposits or seek additional loans to help finance their businesses, and a significant deterioration of business conditions in our markets. Sustained adverse effects may also increase our cost of capital, prevent us from satisfying our minimum regulatory capital ratios and other ~~relationship managers who can~~supervisory requirements, or result in downgrades in our credit rating. The extent to which the COVID-19 pandemic impacts our business, financial condition, liquidity and results of operations will

Table of Contents

depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic, the continued effectiveness of our business continuity plan, the direct and indirect impact of the pandemic on our customers, colleagues, counterparties and service ~~multiple product lines. The Company has an ongoing process for evaluating the profitability of its branch system~~providers, and actions taken by governmental authorities and other ~~office~~third parties in response to the pandemic.

The length of the pandemic and ~~operational facilities. The identification~~the effectiveness of ~~unprofitable operations~~the measures being put in place to address it are unknown and ~~facilities can lead to restructuring charges and introduce the risk of disruptions to~~we face possible continued impacts on liquidity, operating revenues, and ~~customer relationships. The Company competes with larger providers who are rapidly evolving their service channels and escalating~~credit performance.To the ~~costs~~extent the pandemic adversely affects our business, financial condition, liquidity, or results of ~~evolving~~operations, it may also have the ~~service process.~~effect of heightening many of the other risks described in this Annual Report on Form 10-K.

The Company is Subject to Security and Operational Risks Relating to the Use of Technology that Could Damage the Company's Reputation and Business.

Security breaches of confidential information in our technology platforms could expose the Company to possible liability and damage its reputation. Any compromise of data security could also deter customers from using the

~~Table of Contents~~

Company's services. The Company relies on industry standard internet security and authentication systems to effect secure transmission of data. These precautions may not protect the Company's security systems from compromises or breaches and could result in damage to its reputation and business. The Company utilizes third party core banking software, in addition to other outsourced data processing. If third party providers encounter difficulties or if the Company has difficulty in communicating and/or transmitting with such third parties, it could significantly affect its ability to adequately process and account for customer transactions, which could significantly affect its business operations. The Company interfaces with electronic payments systems which are subject to security and operational risks. The Company utilizes file encryption in designated internal systems and networks and is subject to certain state and federal regulations regarding how the Company manages data security. The Company's enterprise governance risk and compliance function includes a framework of controls, policies and technologies to monitor and protect information from cyberattacks, mishandling, and loss, together with safeguards related to the confidentiality, integrity, and availability of information. Natural disasters and disaster recovery risks could affect its operating systems, which could affect its reputation. The Company's business continuity program addresses crisis management, business impact, and data and systems recovery. Potential problems with the management of technology security and operational risks may affect regulatory compliance, which could affect operating costs and expansion ~~plans.~~plans.Implementation of certain new technologies, such as those related to artificial intelligence, automation and algorithms, may have unintended consequences due to their limitations, potential manipulation, or our failure to use them effectively.

The Company Faces Cybersecurity Risks, Including Denial of Service Attacks, Ransomware, Hacking and Identity Theft that Could Result in the Disclosure of Confidential Information or the Creation of Unauthorized Transactions, Which Could Adversely Affect the Company’s Business or Reputation and Create Significant Legal and Financial Exposure.

Increased levels of remote access resulting from more work from home employees may create additional opportunities for cybercriminals to exploit vulnerabilities, and employees may be more susceptible to phishing and social engineering attempts due to work responsibilities at home. In addition, technological resources may be strained due to the number of remote users.

The Company’s computer systems and network infrastructure are subject to security risks and could be susceptible to cyber-attacks, such as denial of service attacks, hacking, terrorist activities or identity theft. Financial services institutions and companies engaged in data processing have reported breaches in the security of their websites or other systems, some of which have involved sophisticated and targeted attacks intended to obtain unauthorized access to confidential information, destroy data, steal financial assets, disable or degrade service, or sabotage systems, often through the introduction of computer viruses or malware, cyber-attacks and other means. Denial of service attacks have been launched against a number of large financial services institutions. As a growing regional bank, the Company may be subject to similar attacks in the future. Hacking and identity theft risks could cause serious reputational harm and possible financial loss to the Company. Cyber threats are rapidly evolving and the Company may not be able to anticipate or prevent all such attacks.

The Company may incur increasing costs in an effort to minimize these risks and could be held liable for any security breach or loss. Despite efforts to ensure the integrity of its systems, the Company will not be able to anticipate all security breaches of these types, and the Company may not be able to implement effective preventive

Table of Contents

measures against such security breaches. The techniques used by cyber criminals change frequently and can originate from a wide variety of sources, including outside groups such as external service providers, organized crime affiliates, terrorist organizations or hostile foreign governments. Those parties may also attempt to fraudulently induce employees, customers or other users of the Company’s systems to disclose sensitive information in order to gain access to its data or that of its clients or to conduct unauthorized financial transactions.

These risks may increase in the future as the Company continues to increase its mobile-payment and other internet-based product offerings and expands its internal usage of web-based products and applications. A successful penetration or circumvention of system security could cause serious negative consequences to the Company, including significant disruption of operations, misappropriation of confidential information of the Company or that of its customers, or damage to computers or systems of the Company or those of its customers and counterparties. A security breach could result in violations of applicable privacy and other laws, financial loss to the Company or to its customers, loss of confidence in the Company’s security measures, significant litigation exposure, and harm to the Company’s reputation, all of which could have a material adverse effect on the Company.

~~Table of Contents~~

~~The Company is subject to regulatory environment changes regarding privacy~~Counterparties and ~~data protection and could have a material impact on our results of operations.~~

The growth and expansion of the company into a variety of new fields may potentially involve new regulatory issues/requirements such as the EU General Data Protection Regulation (GDPR) or the New York Department of Financial Services (NYDFS) Cybersecurity Regulation. The potential costs of compliance with or imposed by new/existing regulations and policies that are applicable to us may affect the use of our products and services and could have a material adverse impact on our results of operations.

~~The Company needs to stay current on technological changes in order to compete and meet customer demands.~~

The financial services market is changing rapidly with frequent introductions of new technologies which increase service and improve efficiency. Some of the Company’s competitors have substantially greater resources to invest in technological improvements than it currently has. The Company may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to its customers.

~~Financial and Operating Counterparties~~Correspondents Expose the Company to Risks.

The Company's use of derivative financial instruments exposes us to financial and contractual risks with counterparties. The Company maintains correspondent bank relationships, ~~manage~~purchase loans, manages certain loan participations, engage in securities and funding transactions, and undergo other activities with financial counterparties that are customary to its industry. The Company also utilizes services from major vendors of technology, telecommunications, and other essential operating services. There is financial, reputational, and ~~operating~~operational risk in these relationships, which the Company seeks to manage through internal controls and procedures, but there are no assurances that the Company will not experience loss or interruption of its business as a result of unforeseen events with these providers. The Company's ~~expanded~~ mortgage banking operations have ~~also~~ exposed us to ~~more~~ counterparty transactions including the use of third parties to participate in the management of interest rate risk and mortgage sales and hedging. Financial, reputational, and operational risks are inherent in these counterparty and correspondent relationships. The Company could experience losses if there are failures in the controls or accounting, including those related to derivatives activities or if there are performance failures by any counterparties. The risk of loss is increased when interest rates change suddenly and if the intended hedging objectives are not achieved as a result of market or counterparty behaviors.

The Company’s Business is Reliant on Outside Vendors.

The Company’s business is highly dependent on the use of certain outside vendors for its day-to-day operations. The Company’s operations and reputationare exposed to risk that a vendor may not perform in accordance with established performance standards required in its agreements for any number of reasons including a change in their senior management, their financial condition, their product line or mix and how they support existing customers, or a simple change in their strategic focus. While the Company has comprehensive programs, policies and procedures in place to mitigate risk at all phases of vendor management from selection, to performance monitoring and renewals, the failure of a vendor to perform in accordance with contractual agreements could be disruptive to its business, which could have a material adverse effect on its financial condition, strategic objectives, and results of operations.

Development of New Products and Services May ~~Not Be Able~~Impose Additional Costs on the Company and May Expose It to ~~Attract and Retain Skilled People.~~Increased Operational Risk.

The ~~Company's success~~Company’s financial performance depends, in ~~large~~ part, on its ability to ~~attract~~develop and market new ~~employees, retain~~ and ~~motivate~~innovative services and to adopt or develop new technologies that differentiate its ~~existing employees,~~products or provide cost efficiencies, while avoiding increased related expenses. This dependency is exacerbated in the current “FinTech” environment, where financial institutions are investing significantly in evaluating new technologies, such as “Blockchain,” and ~~continue~~developing potentially industry-changing new products, services and industry standards. The introduction of new products and services can entail significant time and resources, including regulatory approvals. Substantial risks and uncertainties are associated with the introduction of new products and services, including technical and control requirements that may need to ~~compensate employees competitively. Competition for~~be developed and implemented, rapid technological change in the ~~best people~~industry, the Company’s ability to access technical and other information from its clients, the significant and ongoing investments required to bring new products and services to market in a timely manner at competitive prices and the

Table of Contents

preparation of marketing, sales and other materials that fully and accurately describe the product or service and its underlying risks. The Company’s failure to manage these risks and uncertainties also exposes it to enhanced risk of operational lapses which may result in the recognition of financial statement liabilities. Regulatory and internal control requirements, capital requirements, competitive alternatives, vendor relationships and shifting market preferences may also determine if such initiatives can be ~~intense~~brought to market in a manner that is timely and attractive to the Company’s clients. Products and services relying on internet and mobile technologies may expose the Company ~~may not be able~~ to ~~hire or retain appropriately qualified individuals. As a result of restructuring activities, the Company could experience challenges~~fraud and cybersecurity risks. Failure to successfully manage these risks in the ~~retention~~development and implementation of ~~existing employees.~~

~~Controls and Procedures May Fail~~new products or ~~Be Circumvented.~~

Management regularly reviews and updates the Company’s internal controls, disclosure requirements and practices, and corporate governance policies and procedures. Any system of controls, however well designed and operated, can only provide reasonable, not absolute, assurances that the objectives of the system are met. Any failure or circumvention of the controls and procedures or failure to comply with regulations related to controls and proceduresservices could have a material adverse effect on the Company’s business and reputation, as well as on its consolidated results of operations and financial condition.

Tailoring The Bank’s Retail Delivery Model to Respond to Consumer Preferences in Banking May Negatively Affect Earnings.

The Company’s branch network continues to be a very significant source of new business generation, however, consumers continue to migrate much of their routine banking to self-service channels. In recognition of this shift in consumer patterns, we regularly review the branch network, which has resulted in branch consolidation accompanied by the enhancement of the Bank’s capabilities to serve its customers through alternate delivery channels. The benefits of this strategy will depend on our ability to realize expected benefits without experiencing significant customer attrition.

The Discontinuation of LIBOR and the Transition to an Alternative Reference Rate Could Adversely Impact the Company’s Business and Results of Operations.

The interest rates paid on certain of the Company’s floating-rate funding, hedging transactions and products, such as floating-rate loans and mortgages, are indexed to the London Interbank Offered Rate (“LIBOR”). The use of LIBOR on new contracts was discontinued on December 31, 2021, and LIBOR will cease publication after June 30, 2023.

Regulators and various financial industry groups have sponsored or formed committees (e.g., the Federal Reserve-sponsored Alternative Reference Rates Committee) to, among other things, facilitate the identification of an alternative benchmark index to replace LIBOR, and publish consultations on recommended practices for transitioning away from LIBOR, including (i) the utilization of recommended fallback language for LIBOR-linked financial instruments, and (ii) development of alternative pricing methodologies for recommended alternative benchmarks such as the Secured Overnight Financing Rate (“SOFR”). SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S. Treasury securities, and is based on directly observable U.S. Treasury-based repurchase transactions. The March 2022 enactment of the Adjustable Interest Rate (LIBOR) Act and the Federal Reserve’s proposed implementing regulations established SOFR as the benchmark rate that will automatically apply to agreements that rely on LIBOR and do not have an alternative contractual fallback benchmark rate. The selected SOFR-based replacement benchmark rates may also apply automatically to contracts with fallback provisions that authorize a particular person to determine the replacement benchmark. The Company adopted SOFR as its preferred benchmark as an alternative to LIBOR for use in new contracts beginning on January 1, 2022.

At this time, it is still not possible to predict whether these recommendations and proposals will be broadly accepted in the market, whether they will continue to evolve, and what the effect of their implementation may be on the markets for floating-rate financial instruments. The discontinuation of LIBOR could result in disputes with customers or other counterparties, changes to the Company’s risk exposures (for example, if the anticipated discontinuation of LIBOR adversely affects the availability or cost of floating-rate funding and, therefore, the Company’s exposure to fluctuations in interest rates), or otherwise result in losses on a product or having to pay more or receive less on securities that the Company has issued or owns. A substantial portion of the Company’s on- and off-balance sheet financial instruments are indexed to LIBOR, including interest rate swap agreements and other contracts used for hedging and trading account purposes, loans to commercial customers and consumers (including mortgage loans and other loans), and long-term borrowings. In addition, such uncertainty could result in pricing volatility and increased capital requirements, loss of market share in certain products, adverse tax or accounting impacts, and compliance, legal and operational costs and risks.

Table of Contents

Interest Rate Risks

Market Interest Rate Conditions Could Adversely Affect Results of Operations and Financial Condition

Net interest income is the Company's largest source of income. Changes in interest rates can affect the amount of interest we receive on loans and investments and the amount of interest we pay on deposits and borrowings, which may affect our net interest margins and other elements of net income. The Company’s interest rate sensitivity is discussed in more detail in Item 7A of this report and is the primary market risk to its condition and operations.

Changes in interest rates can also affect the demand for the Company’s products and services, supply conditions in the U.S. financial and capital markets, loan prepayments, the Company’s ability to originate real estate loans, the value of its assets, its ability to realize gains from the sale of assets, and loan delinquencies and defaults, all of which ultimately affect earnings. Changes in interest rates may also affect the market value of the Company’s investment securities portfolio, which may affect the level and adequate of its regulatory capital.

During 2022, in response to accelerated inflation, the Federal Reserve implemented monetary tightening policies, resulting in significantly increased interest rates. The Federal Reserve has signaled that further tightening is anticipated. If the interest rates paid on deposits and other borrowings increase at a faster rate than the interest rates received on loans and other investments, our net interest income, and therefore earnings, could be adversely affected. In a rising rate environment, demand for loans may decrease and loans with adjustable interest rates are more likely to experience a higher rate of default. Additionally, changes in interest rates also affect the fair value of the securities portfolio. Generally, the value of securities moves inversely with changes in interest rates.

Earnings could also be adversely affected if the interest rates received on loans and other investments fall more quickly than the interest rates paid on deposits and other borrowings. In addition, in a falling rate environment or the recent pandemic-related environment where the Federal Reserve held the federal reference rate near 0.00%, loans may be prepaid sooner than we expect, which could result in a delay between when we receive the prepayment and when we are able to redeploy the funds into new interest-earning assets and in a decrease in the amount of interest income we are able to earn on those assets.

Any substantial, unexpected or prolonged change in market interest rates could have a material adverse effect on our financial condition and results of operations. Also, our interest rate risk modeling techniques and assumptions likely may not fully predict or capture the impact of actual interest rate changes on our balance sheet.

Liquidity

The Company's Wholesale Funding Sources May Prove Insufficient to Replace Deposits at Maturity and Support Operations and Future Growth.

The Company must maintain sufficient funds to respond to the needs of depositors and borrowers. As a part of its liquidity management, the Company uses a number of funding sources in addition to deposit growth and cash flows from loans and investments. These sources include Federal Home Loan Bank advances, proceeds from the sale of loans, and liquidity resources at the holding company. The Company uses brokered deposits both to support ongoing growth and to provide enhanced deposit insurance to support large dollar commercial relationships. The Company's financial flexibility will be severely constrained if the Company is unable to maintain access to wholesale funding or if adequate financing is not available to accommodate future growth at acceptable costs. Turbulence in the capital

~~Table of Contents~~

and credit markets may adversely affect liquidity and financial condition and the willingness of certain counterparties and customers to do business with the Company.

The Company's Ability to Service Our Debt, Pay Dividends, and Otherwise Pay Obligations as They Come Due Is Substantially Dependent on Capital Distributions from the Bank, and These Distributions Are Subject to Regulatory Limits and Other Restrictions. The Company’s Stock Repurchase Program is also Dependent on These Distributions.

A substantial source of holding company income is the receipt of dividends from the Bank, from which the Company services debt, pay obligations, and pay shareholder dividends. The availability of dividends from the Bank is limited by various statutes and regulations. It is possible, depending upon the financial condition of the Bank and other factors, that the applicable regulatory authorities could assert that payment of dividends or other types of payments are an unsafe or unsound practice. If the Bank is unable to pay dividends, the Company may not

Table of Contents

be able to service debt, pay debt obligations, or pay dividends on its common stock. The Company may also be unable to repurchase common stock under its Stock Repurchase Program.

Secondary ~~mortgage market conditions could have~~Mortgage Market Conditions Could Have a ~~material impact~~Material Impact on the Company’s ~~financial condition~~Financial Condition and ~~results~~Results of ~~operations.~~Operations.

In addition to being affected by interest rates, the secondary mortgage markets are also subject to investor demand for residential mortgage loans and increased investor yield requirements for these loans. These conditions may fluctuate or worsen in the future. As a result, a prolonged period of secondary market illiquidity may reduce the Company’s loan production volumes and operating results.

Secondary markets are significantly affected by Fannie Mae, Freddie Mac and Ginnie Mae (collectively, the “Agencies”) for loan purchases that meet their conforming loan requirements. These agencies could limit purchases of conforming loans due to capital constraints, a change in the criteria for conforming loans or other factors. Proposals to reform mortgage finance could affect the role of the Agencies and the market for conforming loans which comprise the majority of the Company’s mortgage lending and related originations income.

~~Interest Rates~~

~~Market Interest Rate Conditions Could Adversely Affect Results of Operations and Financial Condition.~~

Net interest income is the Company's largest source of income. Changes in interest rates can affect the level of net interest income and other elements of net income. The Company’s interest rate sensitivity is discussed in more detail in Item 7A of this report and is the primary market risk to its condition and operations. Changes in interest rates can also affect the demand for the Company’s products and services, and the supply conditions in the U.S. financial and capital markets. Changes in the level of interest rates may negatively affect the Company’s ability to originate real estate loans, the value of its assets and its ability to realize gains from the sale of assets, all of which ultimately affect earnings.

Securities Market Values

Declines in the Value of Certain Investment Securities Could Require Write-Downs, Which Would Reduce Earnings.

Declines in the value of investment securities due to market conditions and/or issuer impairment could result in losses that can reduce capital and earnings. Such declines can result from changes in interest rates and inflation. The Company’s investment in equity securities and non-investment grade debt securities present heightened credit and price risks. Under new accounting standards, equity gains and losses are recorded to current period operating results. The Company has an investment in the stock of the Federal Home Loan Bank of Boston ("FHLBB") which could result in write-down in the event of impairment.

~~Taxation~~

~~Changes in Tax Preference Items May Affect Results of Operations.~~

~~Higher tax expense due to planned or unplanned changes in tax preference items may result in lower profitability. Quarterly results may vary significantly from annual results.~~

~~Changes in Federal Tax Policy May Affect Results of Operations.~~

Changes in federal tax policy may result in unexpected impacts to markets and customer behaviors. New tax regulations may result in changes to deductions and tax preferences, which could require a further write-down of the

~~Table of Contents~~

~~deferred tax asset. Changes could affect the Company’s financial results and also could affect the profitability of tax preferred investments.~~

Regulatory Matters

Legislative and Regulatory Initiatives May Affect Business Activities and Increase Operating Costs.

New federal or state laws and regulations could affect lending, funding practices, capital, and liquidity standards. New laws, regulations, and other regulatory changes may also increase compliance costs and affect business and operations. Moreover, the FDIC sets the cost of FDIC insurance premiums, which can affect profitability.

Regulatory capital requirements and their impact on the Company may change. ItThe Company may need to raise additional capital in the future to support operations and continued growth. The Company's ability to raise capital, if needed, will depend on its condition and performance, and on market conditions. If additional capital is not available when needed, it could affect operations and the execution of the strategic plan, which includes further expanding operations through internal growth and acquisitions.

New laws, regulations, and other regulatory changes, along with negative developments in the financial industry and the domestic and international credit markets, may significantly affect the markets in which the Company does business, the markets for and value of its loans and investments, and ongoing operations, costs and profitability. For more information, see “Regulation and Supervision” in Item 1 of this report.

~~In 2017, the Company crossed the~~With total assets over $10 billion, ~~asset threshold established by~~ the ~~Dodd-Frank act. The~~ Company and the Bank are ~~now~~ subject to closer supervision by their primary regulators and, as to compliance with consumer protection laws and regulations, the Consumer Financial Protection Bureau. The Company and the Bank are subject to ~~new~~ capital stress testing ~~requirements~~expectations which require significant ~~new~~ resources and infrastructure. If the Company’s compliance with the enhanced supervision and requirements is insufficient, there can be significant negative consequences for its operations, profitability, and ability to further pursue its strategic growth plan.

Provisions of the Company's Certificate of Incorporation, Bylaws, and Delaware Law, as Well as State and Federal Banking Regulations, Could Delay or Prevent a Takeover of Us by a Third Party.

Provisions in the Company's certificate of incorporation and bylaws, the corporate law of the State of Delaware, and state and federal regulations could delay, defer or prevent a third party from acquiring us, despite the possible benefit stockholders, or otherwise adversely affect the price of its common stock. These provisions include: limitations on voting rights of beneficial owners of more than 10 percent of common stock; supermajority voting requirements for certain business combinations; the election of directors to terms of one year; and advance notice

Table of Contents

requirements for nominations for election to the Company's Board of Directors and for proposing matters that stockholders may act on at stockholder meetings. In addition, the Company is subject to Delaware laws, including one that prohibits engaging in a business combination with any interested stockholder for a period of three years from the date the person became an interested stockholder unless certain conditions are met. These provisions may discourage potential takeover attempts, discourage bids for the Company's common stock at a premium over market price or adversely affect the market price of, and the voting and other rights of the holders of, its common stock. These provisions could also discourage proxy contests and make it more difficult for stockholders to elect directors other than the candidates nominated by the Board.

Significant Accounting Estimates

Various Factors May ~~Not Be Realized in Accordance with Recorded Estimates.~~

~~Unexpected Changes May Adversely Affect Condition or Performance.~~Cause our Allowance for Credit Losses on Loans to Increase.

The ~~Company’s significant accounting policies are described in Note 1 - Summary~~Company has an allowance for current expected credit losses on loans maintained through a provision for credit losses charged to expense. This represents our estimate of ~~Significant Accounting Policies~~current expected credit losses based on an evaluation of risks within the portfolio of loans. The level of the ~~Consolidated Financial Statements~~allowance represents management’s estimate of current expected credit losses over the contractual life of the existing loan portfolio. The determination of the appropriate level of the allowance inherently involves a degree of subjectivity and requires that we make significant estimates of current credit risks and current trends and reasonable and supportable forecasts of future economic conditions, all of which may undergo frequent and material changes. Changes in ~~Item 8 of this report.~~ economic and other conditions affecting borrowers, including inflation and interest rates, along with new information regarding existing loans other factors, may indicate the need for a future increase in the allowance.

Fair Value Measurements May Be Affected by Inherent Uncertainties

The ~~SEC defines “critical accounting policies”~~Company uses fair value measurements to determine fair value disclosures and to record fair value adjustments to certain assets and liabilities, such as ~~those that require~~interest rate swaps, impaired loans, securities available for sale, and derivatives. Additionally, from time to time, the Company may be required to record certain assets at fair value on a non-recurring basis, such as certain impaired loans held for investment and capitalized servicing rights. Whenever there is no readily available market data, management uses its best estimate and assumptions in determining fair value, but these estimates involve inherent uncertainties and the application of management’s ~~most difficult, subjective or complex judgments, often as~~judgment. As a result, ~~of the need to make estimates about the effect of matters that are inherently uncertain and may change~~if other assumptions had been used, our recorded earnings or disclosures could have been materially different from those reflected in future periods. The Company’s critical accounting policies are further discussed in Item 7 of this report. If actual events and results do not conform to critical estimates, there could be a material impact onthese financial ~~condition, operating performance, and execution of the strategic plan.~~statements.

~~Table of Contents~~

~~Mergers and Acquisitions~~

~~Acquisitions may disrupt the Company’s business and dilute stockholder value.~~

The Company completed its acquisition of Commerce Bancshares Corp. in October 2017. The Company regularly evaluates merger and acquisition opportunities with other financial institutions and financial services companies. Future mergers or acquisitions involving cash, debt, or equity securities may occur from time to time. The Company seeks acquisition partners that offer either significant market presence or the potential to expand its market footprint and improve profitability through economies of scale or expanded services.

Acquiring other banks, businesses, or branches may have an adverse effect on the Company’s financial results and may involve various other risks commonly associated with acquisitions, including, among other things:

~~difficulty in estimating the value of the target company~~

~~payment of a premium over book and market values that may dilute the Company’s tangible book value and earnings per share in the short and long term;~~

~~exposure to unknown or contingent liabilities, or asset quality problems, of the target company;~~

~~unexpected regulatory responses to merger related applications~~

~~larger than anticipated merger-related expenses;~~

~~difficulty and expense of integrating the operations and personnel of the target company, and retaining key employees and customers;~~

~~inability to realize the expected revenue increases, cost savings, increases in geographic or product presence, and/or other projected benefits; and~~

~~potential diversion of Company management’s time and attention.~~

If the Company is unable to successfully integrate an acquired company, the anticipated benefits may not be realized fully or may take longer to realize than expected. A significant decline in asset valuations or cash flows may also prevent the attainment of targeted results. Additional discussion about the risk of acquisitions is included above in the discussion of Operating Risk.

Trading of the Company's Common Stock

The Trading History of ~~The~~the Company’s Common Stock Isis Characterized By Low Trading Volume. The Value of Shareholder Investments May be Subject Toto Sudden Decreases Due Toto the Volatility of the Price of the Common Stock.

The level of interest and trading in the Company’s stock depends on many factors beyond the Company's control. The market price of the Company's common stock may be highly volatile and subject to wide fluctuations in response to numerous factors, including, but not limited to, the factors discussed in other risk factors and the following: actual or anticipated fluctuations in operating results; changes in interest ~~rates;~~rates and inflation; changes in the legal or regulatory environment; press releases, announcements or publicity relating to the Company or its competitors or relating to trends in its industry; changes in expectations as to future financial performance, including financial estimates or recommendations by securities analysts and investors; future sales of its common stock; changes in economic conditions in the marketplace, general conditions in the U.S. economy, financial markets or the banking industry; and other developments. These factors may adversely affect the trading price of the Company's common stock, regardless of actual operating performance, and could prevent stockholders from selling their common stock at a desirable price.

In the past, stockholders have brought securities class action litigation against a company following periods of volatility in the market price of their securities. The Company could be the target of similar litigation in the future, which could result in substantial costs and divert management’s attention and resources.

Table of Contents

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

The Company's headquarters are located at 60 State Street in leased property in Boston, ~~Mass.~~MA. The Bank's headquarters are located in owned and leased facilities located in Pittsfield, ~~Mass.~~MA. The Company also owns or leases other facilities within its primary market areas: Greater Boston (including Worcester, MA); ~~Berkshire County, Massachusetts;~~ Pioneer Valley (Springfield area), Massachusetts; Berkshire County, Massachusetts; Southern Vermont; the Capital Region (Albany area), New York; Central New York; ~~Northern~~Central and Eastern Connecticut; and ~~and Princeton area, New Jersey.~~Southern Rhode Island. As of December 31, ~~2017,~~2022 the Company had ~~113~~100 full-service ~~branches~~financial centers in Massachusetts, New York, Connecticut, ~~Vermont, Central New Jersey,~~Rhode Island, and ~~Eastern Pennsylvania.~~Vermont.

The Company also has regional locations which are full-service commercial offices located in Boston, MA.; Pittsfield, MA.; Springfield, MA.; Albany, N.Y.; East Syracuse, N.Y.; Hartford, ~~Conn.~~CT.; Willimantic, CT. Worcester, MA.; Burlington, ~~MA.;~~MA, Providence RI, and ~~Lawrenceville, N.J. In addition, the Company has eight lending locations in Central/Eastern, Massachusetts.~~New Haven, CT. The Bank's ~~wholly-owned subsidiary, Firestone Financial, LLC,~~44 Business Capital lending division is headquartered in ~~the Boston metro area.~~Blue Bell, Pennsylvania.

~~Berkshire Insurance Group Inc. operates from 12 locations in Western Massachusetts and East Syracuse, N.Y. in both stand-alone premises as well as in rented space located in the Bank’s premises.~~

The Company acquired Commerce Bancshares ("Commerce") in October of 2017, obtaining 13 branches in and around the Worcester, MA area. The Company also assumed Commerce's three branches and three lending offices in the Boston metro area.

The Company acquired First Choice Bank in December of 2016, assuming eight full-service branches in the Princeton, N.J. and greater Philadelphia areas. As a part of the acquisition, First Choice Loan Services Inc., headquartered in East Brunswick, N.J., became a wholly-owned subsidiary of the Bank. As a national mortgage lender, the Company acquired its 12 loan production offices across six states. In 2016, the Company sold two existing branches that management determined to have redundancy with its current footprint.

Berkshire continues to enhance its new retail branch design which eliminates traditional teller counters and provides an interactive customer service environment through “pod” stations which include automated cash handling technology. In many cases, this branch design also includes a multimedia community room which is offered for use by nonprofit community groups. The Company has begun introducing MyTeller automated remote teller stations at new offices and targeted existing offices. The Bank has made its workplace more flexible as certain designated functions are approved for telecommuting arrangements. As a result of its efficiency initiatives, the Bank has been in the process of identifying and reducing real estate utilized for its operations.

Due to the pandemic, the Company adapted its infrastructure and protocols to accommodate the shift of back office operations out of the office and continues to support this expanded capability and flexibility in pursuit of its strategies and human capital management.

Table of Contents

ITEM 3. LEGAL PROCEEDINGS

As of December 31, ~~2017,~~2022, neither the Company nor the Bank was involved in any pending legal proceedings believed by management to be material to the Company’s financial condition or results of operations. Periodically, there have been various claims and lawsuits involving the Bank, such as claims to enforce liens, condemnation proceedings on properties in which the Bank holds security interests, claims involving the making and servicing of real property loans, and other issues incident to the Bank’s business. ~~However,~~A summary of certain legal matters involving unsettled litigation or pertaining to pending transactions are as follows:

On February 4, 2020, the Bank filed a complaint in the New York State Supreme Court for the County of Albany against Pioneer Bank (“Pioneer”) seeking damages of approximately $16.0 million. The complaint alleges that Pioneer is liable to the Bank for a credit loss of approximately $16.0 million suffered by the Bank in the third quarter of 2019 as a result of Pioneer’s breach of loan participation agreements in which it served as the lead bank, as well as constructive fraud, fraudulent concealment and/or negligent misrepresentation. Pioneer has filed a motion to dismiss aspects of the Bank’s complaint, which motion was allowed in part by the court to dismiss the Bank’s negligent misrepresentation claim, and denied in part by the court to allow all other ~~than~~claims by the ~~items noted below, neither~~Bank to proceed. Discovery is now underway in this action. The Company wrote down the underlying credit loss in its entirety in the third quarter of 2019, but recognized a partial recovery of $1.7 million early in the second quarter of 2020. The Company has not accrued for any additional anticipated recovery at this time.

On or about August 10, 2020, a former employee of the Bank’s subsidiary First Choice Loan Services Inc. (“FCLS”) filed a complaint in the Court of Common Pleas, Bucks County Pennsylvania against FCLS and two of its former senior corporate officers generally alleging wrongful termination as a result of purported whistleblower retaliation and other violations of New Jersey state employment law. The complaint also purports to name the Bank and the Company ~~nor~~as additional defendants, even though neither entity ever employed, paid wages to or contracted with the plaintiff. On November 16, 2020, the plaintiff filed a First Amended Complaint reiterating the same claims against the same defendants. The Company's liability insurer has provided outside litigation counsel to defend the Company and the Bank ~~is a defendant party to any pending legal proceedings that it believes,~~ in ~~the aggregate, would have a material adverse effect on the financial condition or operations of the Company. Additionally, an estimate of future, probable losses cannot be estimated~~this matter, as ofwell as FCLS and its former senior corporate officers. On December ~~31, 2017.~~

~~On April 28, 2016, Berkshire Hills and Berkshire Bank were served with a complaint~~7, 2020, defense counsel filed ~~in the United States District Court, District of Massachusetts, Springfield Division. The complaint was filed by an individual Berkshire Bank depositor, who claims to have filed the complaint~~Preliminary Objections on behalf of ~~a purported class of Berkshire~~the Company, the Bank, ~~depositors,~~FCLS and ~~alleges violations~~FCLS’s former senior corporate officers denying the plaintiff’s claims and seeking dismissal of the ~~Electronic Funds Transfer Act~~case and ~~certain regulations thereunder, among other matters.~~an order that the plaintiff’s claims must proceed through arbitration in accordance with contractual obligations set forth in plaintiff’s previous employment agreement with FCLS. On ~~July 15, 2016,~~June 30, 2021, the court dismissed the plaintiff’s complaint ~~was amended~~without prejudice in support of FCLS’s petition to ~~add purported claims under~~compel arbitration. The parties have mutually agreed on an arbitrator to hear the ~~Massachusetts Consumer Protection Act. The complaint seeks, in part, compensatory, consequential, statutory,~~case and ~~punitive damages. Berkshire Hills and Berkshire Bank deny the allegations contained~~are preparing for arbitration proceedings that are expected to occur in the ~~complaint and are vigorously defending this lawsuit.~~second half of 2023. Discovery is currently ongoing among the parties.

On January 29, 2018, the Bank was served with an amended complaint filed nominally against Berkshire Hills in the Business Litigation Session of the Massachusetts Superior Court sitting in Suffolk County. The amended complaint was filed by two residuary beneficiaries of an estate planning trust that was administered by the Bank as successor trustee following the death of the trust donor, and alleges the Bank breached its fiduciary duty and violated the Massachusetts Consumer Protection Act in the course of performing its duties as trustee. The complaint seeks compensatory, statutory, and punitive damages. Berkshire Hills and Berkshire Bank deny the allegations contained in the complaint and are vigorously defending this lawsuit.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

Table of Contents

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

The common shares of the Company trade on the New York Stock Exchange under the symbol “BHLB”. ~~The following table sets forth the quarterly high and low sales price information and dividends declared per share of common stock in 2017 and 2016.~~

2017 High Low Dividends
Declared
First quarter $ 37.45
$ 32.90
$ 0.21
Second quarter 38.65
33.55
0.21
Third quarter 39.00
32.85
0.21
Fourth quarter 40.00
35.10
0.21

2016
First quarter $ 28.93
$ 24.71
$ 0.20
Second quarter 28.18
24.80
0.20
Third quarter 28.37
25.90
0.20
Fourth quarter 37.35
27.25
0.20

The Company had approximately ~~3,646~~3,806 holders of record of common stock at February ~~23, 2018.~~24, 2023.

Dividends

The Company intends to pay regular cash dividends to common ~~and preferred~~ shareholders; however, there is no assurance as to future dividends because they are dependent on the Company’s future earnings, capital requirements, financial condition, and regulatory environment. Dividends from the Bank have been a source of cash used by the Company to pay its dividends, and these dividends from the Bank are dependent on the Bank’s future earnings, capital requirements, and financial condition. Dividends from the Bank are currently subject to approval by the Massachusetts Division of Banks and the FDIC. Further information about dividend restrictions is disclosed in Note 18 - Shareholders’ Equity and Earnings per Common Share of the Consolidated Financial Statements.

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

The Company occasionally issues unregistered shares of common stock to vendors or as consideration in contracts for the purchase of assets, services, or operations. ~~The Company issued 30,478~~During 2022 and 2021, there were no shares ~~in 2017 and 8,014 shares in 2016.~~transferred.

Purchases of Equity Securities by the Issuer and Affiliated Purchases

On ~~December 2, 2015,~~January 19, 2022, the Company announced that its Board of Directors ~~authorized~~approved a ~~new~~ stock repurchase program pursuant to which the Company ~~may~~is authorized to repurchase shares of Company common stock at a total cost of up to ~~500 thousand shares~~$140 million through December 31, 2022. This program expired at year-end 2022.

On January 25, 2023, the Company announced that its Board of the Company's common stock, representing approximately 1.6% of the Company’s then outstanding shares. The timing of the purchases will depend on certain factors, including but not limited to, market conditions and prices, available funds, and alternative uses of capital. TheDirectors approved a stock repurchase program ~~may be carried out through open-market purchases, block trades, negotiated private transactions or~~ pursuant to which the Company is authorized to repurchase shares of Company common stock at a ~~trading plan adopted in accordance with Rule 10b5-1 under the Securities Exchange Act~~total cost of 1934. Any repurchased shares will be recorded as treasury shares. The repurchase plan will continue until it is completed or terminated by the Board of Directors. As of year-end 2017, no shares had been purchased under this program.up to $50 million through December 31, 2023.


Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Maximum number of shares that may yet be purchased under the plans or programs
October 1-31, 2022	—	$	—	—	1,178,244
November 1-30, 2022	280,000	30.40		280,000	898,244
December 1-31, 2022	380,500	30.13		380,500	—
Total	660,500	$	30.24	660,500	—

Table of Contents

~~Period~~

~~Total number of~~
~~shares purchased~~

~~Average price~~
~~paid per share~~

~~Total number of shares~~
~~purchased as part of~~
~~publicly announced~~
~~plans or programs~~

~~Maximum number of~~
~~shares that may yet~~
~~be purchased under~~
~~the plans or programs~~

~~October 1-31, 2017~~

—

~~500,000~~

~~November 1-30, 2017~~

—

~~500,000~~

~~December 1-31, 2017~~

—

~~500,000~~

~~Total~~

—

~~500,000~~

Common Stock Performance Graph

The performance graph compares the Company’s cumulative shareholder return on its common stock over the last five years to the cumulative return of the NYSE Composite Index and the ~~PHLX~~ KBW NASDAQ Regional ~~Bank~~Banking Index. Total shareholder return is measured by dividing total dividends (assuming dividend reinvestment) for the measurement period plus share price change for a period by the share price at the beginning of the measurement period. The Company’s cumulative shareholder return over a five-year period is based on an initial investment of $100 on December 31, ~~2012.~~2017. The performance graph represents past performance and should not be considered to be an indication of future performance.

Information used on the graph and table was obtained from a third party provider, a source believed to be reliable, but the Company is not responsible for any errors or omissions in such information.


	Period Ending
Index	12/31/17	12/31/18	12/31/19	12/31/20	12/31/21	12/31/22
Berkshire Hills Bancorp, Inc.	100.00	75.44	84.82	51.87	87.72	94.00
NYSE Composite Index	100.00	91.05	114.28	122.26	147.54	133.75
KBW NASDAQ Regional Banking Index	100.00	82.50	102.15	93.25	127.42	118.59

Source:S&P Global Market Intelligence

ITEM 6. RESERVED

Period Ending
Index 12/31/12 12/31/13 12/31/14 12/31/15 12/31/16 12/31/17
Berkshire Hills Bancorp, Inc. 100.00
117.53
118.35
132.76
173.10
175.94
NYSE Composite Index 100.00
126.06
134.62
129.40
144.72
171.66
PHLX KBW Regional Banking Index 100.00
146.30
149.67
158.62
219.27
223.02

In accordance with the rules of the SEC, this section captioned “Common Stock Performance Graph,” shall not be incorporated by reference into any of our future filings made under the Securities Exchange Act of 1934 or the Securities Act of 1933. The Common Stock Performance Graph, including its accompanying table and footnotes, is not deemed to be soliciting material or to be filed under the Exchange Act or the Securities Act.

Table of Contents

~~ITEM 6. SELECTED FINANCIAL DATA~~

The following summary data is based in part on the Consolidated Financial Statements and accompanying notes, and other schedules appearing elsewhere in this Form 10-K. Historical data is also based in part on, and should be read in conjunction with, prior filings with the SEC.

At or For the Years Ended December 31,
(In thousands, except per share data) 2017 2016 2015 2014 2013
Per Common Share Data:

Net earnings, diluted $ 1.39
$ 1.88
$ 1.74
$ 1.36
$ 1.65
Total book value per common share 32.14
30.65
28.64
28.17
27.08
Dividends 0.84
0.80
0.76
0.72
0.72
Common stock price:
High 40.00
37.35
30.40
27.28
29.38
Low 32.85
24.71
24.32
22.06
23.38
Close 36.60
36.85
29.11
26.66
27.27
Performance Ratios: (1)

Return on assets 0.56 % 0.74 % 0.68 % 0.55 % 0.78 %
Return on equity 4.45
6.44
6.14
4.87
6.09
Net interest margin, fully taxable equivalent (FTE) (2) 3.40
3.31
3.34
3.30
3.67
Fee income/Net interest and fee income 29.41
22.80
21.18
23.02
23.04
Growth Ratios:

Total commercial loans 37.79%
18.39 % 28.65 % 14.80 % 4.51 %
Total loans 26.71
14.41
22.32
11.96
4.81
Total deposits 32.13
18.48
20.08
20.95
(6.14 )
Total net revenues, (compared to prior year) 41.05
11.18
18.40
(0.23 ) 14.96
Earnings per share, (compared to prior year) (26.06 ) 8.62
27.21
(17.58 ) 10.74
Selected Financial Data:

Total assets $ 11,570,751
$ 9,162,542
$ 7,831,086
$ 6,501,079
$ 5,671,724
Total earning assets 10,509,163
8,340,287
7,140,387
5,923,462
5,085,152
Securities 1,898,564
1,628,246
1,371,316
1,205,794
870,091
Total loans 8,299,338
6,549,787
5,725,236
4,680,600
4,180,523
Allowance for loan losses (51,834 ) (43,998 ) (39,308 ) (35,662 ) (33,323 )
Total intangible assets 557,583
422,551
334,607
276,270
270,662
Total deposits 8,749,530
6,622,092
5,589,135
4,654,679
3,848,529
Total borrowings 1,137,075
1,313,997
1,263,318
1,051,371
1,063,032
Total shareholders’ equity 1,496,264
1,093,298
887,189
709,287
678,062

~~Table of Contents~~

At or For the Years Ended December 31,
2017 2016 2015 2014 2013
Selected Operating Data:

Total interest and dividend income $ 360,258
$ 280,439
$ 247,030
$ 207,042
$ 203,741
Total interest expense 65,463
48,172
33,181
28,351
34,989
Net interest income (3) 294,795
232,267
213,849
178,691
168,752
Fee income 122,801
68,606
57,480
53,434
50,525
All other non-interest income (loss) 2,888
(2,755 ) (3,192 ) (5,664 ) 7,707
Total net revenue 420,484
298,118
268,137
226,461
226,984
Provision for loan losses 21,025
17,362
16,726
14,968
11,378
Total non-interest expense 299,710
203,302
196,829
165,986
157,359
Income tax expense - continuing operations 44,502
18,784
5,064
11,763
17,104
Net income $ 55,247
$ 58,670
$ 49,518
$ 33,744
$ 41,143

Dividends per preferred share $ 0.42
$ —
$ —
$ —
$ —
Dividends per common share 0.84
0.80
0.76
0.72
0.72
Basic earnings per common share 1.40
1.89
1.74
1.36
1.66
Diluted earnings per common share 1.39
1.88
1.73
1.36
1.65

Weighted average common shares outstanding - basic 39,456
30,988
28,393
24,730
24,802
Weighted average common shares outstanding - diluted 39,695
31,167
28,564
24,854
24,965

Asset Quality and Condition Ratios: (4)

Net loans charged-off/average loans 0.19 % 0.21 % 0.25 % 0.29 % 0.29 %
Allowance for loan losses/total loans 0.62
0.67
0.69
0.76
0.80
Loans/deposits 95
99
102
101
109

Capital Ratios:

Tier 1 capital to average assets - Company (5) 9.01 % 7.88 % 7.71 % 7.01 % N/A
Total capital to risk-weighted assets - Company (5) 12.43
11.87
11.91
11.38
N/A
Tier 1 capital to risk-weighted assets - Company (5) 11.15
10.07
9.94
9.03
N/A
Shareholders’ equity/total assets 12.93
11.93
11.33
10.91
11.95

~~(1) All performance ratios are annualized and are based on average balance sheet amounts, where applicable.~~

~~(2) Fully taxable equivalent considers the impact of tax advantaged investment securities and loans.~~

~~(3) For the years 2014 and 2013, the above schedule includes an immaterial adjustment of prior period interest income earned on loans acquired in bank acquisition.~~

(4) Generally accepted accounting principles require that loans acquired in a business combination be recorded at fair value, whereas loans from business activities are recorded at cost. The fair value of loans acquired in a business combination includes expected loan losses, and there is no loan loss allowance recorded for these loans at the time of acquisition. Accordingly, the ratio of the loan loss allowance to total loans is reduced as a result of the existence of such loans, and this measure is not directly comparable to prior periods. Similarly, net loan charge-offs are normally reduced for loans acquired in a business combination since these loans are recorded net of expected loan losses. Therefore, the ratio of net loan charge-offs to average loans is reduced as a result of the existence of such loans, and this measure is not directly comparable to prior periods. Other institutions may have loans acquired in a business combination, and therefore there may be no direct comparability of these ratios between and among other institutions.

(5) In July 2014, the Company changed its status from a savings and loan holding company to a bank holding company through the Bank's conversion from a Massachusetts-chartered savings bank to a Massachusetts-chartered trust company. As a result of this change, the Company became subject to bank holding company capital requirements including the requirement to report Tier 1 capital to average assets, Tier 1 capital to risk-weighted assets, and total capital to risk-weighted assets.

~~Table of Contents~~

~~Average Balances, Interest and Average Yields/Cost~~

The following table presents an analysis of average rates and yields on a fully taxable equivalent basis for the years presented. Tax exempt interest revenue is shown on a tax-equivalent basis for proper comparison.

~~Item 6 - Table 3 - Average Balance, Interest and Average Yields / Costs~~

2017 2016 2015
(Dollars in millions)
Average
Balance
Interest
Average
Yield/
Rate

Average
Balance
Interest
Average
Yield/
Rate

Average
Balance
Interest
Average
Yield/
Rate
Assets

Loans: (1)

Commercial real estate $ 2,789.8
$ 130.0
4.66 % $ 2,239.6
$ 95.8
4.28 % $ 1,881.2
$ 81.1
4.31 %
Commercial and industrial loans 1,259.9
65.7
5.21
1,019.7
51.2
5.02
932.4
41.8
4.48
Residential loans 1,962.4
71.5
3.64
1,808.8
66.1
3.66
1,622.8
62.6
3.86
Consumer loans 1,032.6
39.4
3.82
873.3
29.9
3.42
802.5
26.1
3.25
Total loans 7,044.7
306.6
4.35
5,941.4
243.0
4.09
5,238.9
211.6
4.04
Investment securities (2) 1,757.3
60.3
3.43
1,260.5
41.4
3.28
1,300.9
38.9
2.99
Short-term investments and loans held for sale 134.5
4.6
3.38
51.6
0.9
1.70
62.2
0.7
1.10
Total interest-earning assets 8,936.5
371.5
4.16
7,253.5
285.3
3.93
6,602.0
251.2
3.81
Intangible assets 449.7
0

347.7

311.5

Other non-interest earning assets 428.4
0

357.9

341.0

Total assets $ 9,814.6

$ 7,959.1

$ 7,254.5

Liabilities and shareholders' equity
Deposits:

NOW $ 591.0
$ 1.5
0.25 % $ 487.8
$ 0.7
0.14 % $ 462.9
$ 0.7
0.15 %
Money market 1,935.8
11.2
0.58
1,470.3
7.0
0.48
1,444.1
5.9
0.41
Savings 680.1
0.9
0.14
610.8
0.7
0.12
582.4
0.9
0.15
Certificates of deposit 2,581.1
30.3
1.17
2,094.8
22.5
1.07
1,684.8
15.5
0.92
Total interest-bearing deposits 5,788.0
43.9
0.76
4,663.7
30.9
0.66
4,174.2
23.0
0.55
Borrowings and notes (3) 1,373.8
21.6
1.57
1,218.2
17.3
1.42
1,212.5
10.2
0.84
Total interest-bearing liabilities 7,161.8
65.5
0.91
5,881.9
48.2
0.82
5,386.7
33.2
0.62
Non-interest-bearing demand deposits 1,296.4

1,081.0

972.6

Other non-interest-bearing liabilities 112.6

85.2

89.1

Total liabilities 8,570.8

7,048.1

6,448.4

Total shareholders' equity 1,243.8

911.0

806.1

Total liabilities and equity $ 9,814.6

$ 7,959.1

$ 7,254.5

Net interest-earning assets $ 1,774.7

$ 1,371.6

$ 1,215.3

Net interest income $ 306.0
$ 237.1
$ 218.0

~~Table of Contents~~

2017 2016 2015
(Dollars in millions)
Average
Balance
Interest
Average
Yield/
Rate

Average
Balance
Interest
Average
Yield/
Rate

Average
Balance
Interest
Average
Yield/
Rate
Net interest spread

3.25 %

3.11 %

3.19 %
Net interest margin (4)

3.40

3.31

3.34
Cost of funds

0.77

0.69

0.52
Cost of deposits

0.62

0.54

0.45
Interest-earning assets/interest-bearing liabilities

124.78

123.32

122.56

Supplementary data

Total non-maturity deposits $ 4,503.3

$ 3,649.9

$ 3,462.0

Total deposits 7,084.4

5,744.7

5,146.8

Fully taxable equivalent adjustment 11.2

8.1

6.4

~~Notes:~~

~~(1) The average balances of loans include nonaccrual loans, and deferred fees and costs.~~

~~(2) The average balances of loans include nonaccrual loans, and deferred fees and costs.~~

~~(3) The average balances of borrowings and notes include the capital lease obligation presented under other liabilities on the consolidated balance sheet.~~

(4) Purchased loan accretion totaled $14.8 million, $8.1 million, and $7.6 million for the years-ended December 31, 2017, 2016, and 2015, respectively. The effect of purchased loan accretion on the net interest margin was an increase in all years, which is shown sequentially as follows beginning with the most recent year and ending with the earliest year: 0.17%, 0.11%, and 0.12%.

~~Table of Contents~~

~~Rate/Volume Analysis~~

The following table presents the effects of rate and volume changes on the fully taxable equivalent net interest income. Tax exempt interest revenue is shown on a tax-equivalent basis for proper comparison. For each category of interest-earning assets and interest-bearing liabilities, information is provided with respect to changes attributable to (1) changes in rate (change in rate multiplied by prior year volume), (2) changes in volume (change in volume multiplied by prior year rate), and (3) changes in volume/rate (change in rate multiplied by change in volume) have been allocated proportionately based on the absolute value of the change due to the rate and the change due to volume.

~~Item 6 - Table 4 - Rate Volume Analysis~~

2017 Compared with 2016 2016 Compared with 2015
(Decrease) Increase Due to (Decrease) Increase Due to
(In thousands) Rate Volume Net Rate Volume Net
Interest income:

Commercial real estate $ 9,145
$ 25,080
$ 34,225
$ (591 ) $ 15,335
$ 14,744
Commercial and industrial loans 1,999
12,457
14,456
5,294
4,120
9,414
Residential loans (259 ) 5,595
5,336
(3,427 ) 6,920
3,493
Consumer loans 3,698
5,839
9,537
1,416
2,379
3,795
Total loans 14,583
48,971
63,554
2,692
28,754
31,446
Investment securities 1,985
16,978
18,963
3,667
(1,238 ) 2,429
Short-term investments and loans held for sale 1,405
2,271
3,676
324
(132 ) 192
Total interest income $ 17,973
$ 68,220
$ 86,193
$ 6,683
$ 27,384
$ 34,067

Interest expense:

NOW accounts $ 627
$ 165
$ 792
$ (39 ) $ 35
$ (4 )
Money market accounts 1,698
2,506
4,204
1,000
109
1,109
Savings accounts 122
88
210
(212 ) 42
(170 )
Certificates of deposit 2,205
5,561
7,766
2,861
4,140
7,001
Total deposits 4,652
8,320
12,972
3,610
4,326
7,936
Borrowings 1,981
2,338
4,319
7,008
48
7,056
Total interest expense $ 6,633
$ 10,658
$ 17,291
$ 10,618
$ 4,374
$ 14,992
Change in net interest income $ 11,340
$ 57,562
$ 68,902
$ (3,935 ) $ 23,010
$ 19,075

~~NON-GAAP FINANCIAL MEASURES~~

This document contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles (“GAAP”). These non-GAAP measures 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 adjusted earnings can be of substantial importance to the Company’s results for any particular quarter or year. The Company’s non-GAAP adjusted 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 adjusted earnings in evaluating operating trends, including components for adjusted revenue and expense. These measures exclude amounts which the Company views as unrelated to its normalized operations, including securities gains/losses, gains on the sale of business operations, losses recorded for hedge terminations, merger costs, restructuring costs, systems conversion costs, and certain dispute settlement costs. Non-GAAP adjustments are presented net of an adjustment for income tax expense. In 2017, there was a large adjustment for the write-down of the deferred tax asset at year-end due to the passage of federal tax reform. There was also an adjustment for investments in employees and communities which were made by the Company in recognition of the future benefits of federal tax reform. The Company also measures adjusted revenues and adjusted expenses which result from the above adjustments.

The Company calculates certain profitability measures based on its adjusted revenue, expenses, and earnings. The Company also calculates adjusted earnings per share based on its measure of adjusted earnings. 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. Management also believes that the computation of non-GAAP adjusted earnings and adjusted earnings per share may facilitate the comparison of the Company to other companies in the financial services industry.

Charges related to merger and acquisition activity consist primarily of severance/benefit related expenses, contract termination costs, and professional fees. Systems conversion costs relate primarily to the Company’s core systems conversion and related systems conversions costs. Restructuring costs primarily consist of the Company's continued effort to create efficiencies in operations through calculated adjustments to the branch banking footprint. Expense adjustments include variable rate compensation related to non-operating items.

~~The Company also adjusts certain equity related measures to exclude intangible assets due to the importance of these measures to the investment community.~~

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

At or For the Years Ended
(Dollars in thousands) December 31, 2017 December 31, 2016 December 31, 2015
GAAP Net income $ 55,247
$ 58,670
$ 49,518
Non-GAAP measures

Adj: Gain on sale of securities, net (12,598 ) 551
(2,110 )
Adj: Net gains on sale of business operations (296 ) (1,085 ) —
Adj: Loss on termination of hedges 6,629
—
—
Adj: Acquisition, restructuring, conversion, and other related expenses (1) 31,558
15,761
17,611
Adj: Employee and Community Investment 3,400
—
—
Adj: Deferred tax asset impairment 18,145
—
—
Adj: Income taxes (11,277 ) (5,455 ) (5,409 )
Net non-operating charges 35,561
9,772
10,092
Total adjusted net income (non-GAAP) $ 90,808
$ 68,442
$ 59,610
GAAP Total revenue $ 420,484
$ 298,118
$ 268,137
Adj: Gain on sale of securities, net (12,598 ) 551
(2,110 )
Adj: Net gains on sale of business operations (296 ) (1,085 ) —
Adj: Loss on termination of hedges 6,629
—
—
Total adjusted operating revenue (non-GAAP) $ 414,219
$ 297,584
$ 266,027
GAAP Total non-interest expense $ 299,710
$ 203,302
$ 196,830
Less: Total non-operating expense (see above) (31,558 ) (15,761 ) (17,611 )
Less: Employee and Community Reinvestment (3,400 ) —
—
Adjusted operating non-interest expense (non-GAAP) $ 264,752
$ 187,541
$ 179,219
(in millions, except per share data)
Total average assets $ 9,815
$ 7,958
$ 7,249
Total average shareholders' equity 1,244
911
805
Total average tangible shareholders equity 793
563
494
Total average tangible common shareholders equity 784
563
494
Total tangible shareholders’ equity, period-end 939
671
553
Total tangible common shareholders’ equity, period-end 898
671
553
Total tangible assets, period-end 11,013
8,740
7,496
Total common shares outstanding, period-end (thousands) 45,290
35,673
30,974
Average diluted shares outstanding (thousands)
39,695
31,167
28,564
Earnings per share, diluted $ 1.39
$ 1.88
$ 1.73
Plus: Net adjustments per share, diluted 0.90
0.32
0.36
Adjusted earnings per share, diluted 2.29
2.20
2.09
Book value per common share, period-end 32.14
30.65
28.64
Tangible book value per common share, period-end 19.83
18.81
17.84
Total shareholders' equity/total assets 12.93
11.93
11.33
Total tangible shareholders' equity/total tangible assets 8.52
7.68
7.37
Average operating diluted shares outstanding (thousands)
39,695
31,167
28,564
Performance Ratios
GAAP return on assets 0.56
0.74
0.68
Adjusted return on assets 0.93
0.86
0.82
GAAP return on equity 4.45
6.44
6.15
Adjusted return on equity 7.31
7.51
7.40
Adjusted return on tangible common equity 11.82
12.47
12.49
Efficiency ratio 59.97
58.27
60.88
Supplementary Data (in thousands)

Tax benefit on tax-credit investments 10,182
11,134
16,127
Non-interest income charge on tax-credit investments (8,693 ) (8,993 ) (11,406 )
Net income on tax-credit investments 1,489
2,143
4,721
Intangible amortization 3,493
2,927
3,563
Fully taxable equivalent income adjustment 11,227
8,098
6,354

~~(1)~~

Acquisition, restructuring, conversion, and other related expenses included $24.9 million of merger and acquisition expenses and $6.7 million of restructuring expenses for the year-ended December 31, 2017. For the year-ended 2016, these expenses included $13.5 million in merger and acquisition expenses and $2.3 million of restructuring expenses. For the year-ended 2015, these expenses included $13.2 million in merger and acquisition expenses and $4.5 million of restructuring, conversion, and other expenses.

~~Table of Contents~~

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SELECTED FINANCIAL DATA


	At or For the Years Ended December 31,
(In thousands, except per share data)	2022			2021			2020			2019			2018
Per Common Share Data:
Net earnings/(loss), diluted - continuing operations	$	2.02		$	2.39		$	(10.21)		$	2.05		$	2.36
Net (loss)/earnings, diluted - discontinued operations	—			—			(0.39)			(0.08)			(0.07)
Net earnings/(loss), diluted	$	2.02		$	2.39		$	(10.60)		$	1.97		$	2.29

Total book value per common share	21.51			24.30			23.37			34.65			33.30

Dividends	0.54			0.48			0.72			0.92			0.88
Common stock price:
High	31.78			29.16			33.04			33.72			44.25
Low	23.62			16.35			8.55			26.02			25.77
Close	29.90			28.43			17.12			32.88			26.97
Performance Ratios: (1)
Return on assets	0.82		%	0.98		%	(4.15)		%	0.75		%	0.90		%

Return on equity	7.76			10.18			(37.50)			5.75			6.84


Return on tangible common equity	8.26			10.80			(48.60)			9.36			11.41
Net interest margin, fully taxable equivalent (FTE) (2)	3.26			2.60			2.72			3.17			3.40
Fee income/Net interest and fee income	15.66			22.49			18.10			23.86			23.36

Growth Ratios:
Total commercial loans	12.99		%	(12.09)		%	(4.58)		%	9.19		%	6.17		%
Total loans	22.11			(15.54)			(14.95)			5.08			8.96
Total deposits	2.57			(1.44)			(1.16)			15.07			2.66

Earnings per share, (compared to prior year)	(15.48)			122.55			(638.07)			(13.97)			64.75

Selected Financial Data:
Total assets	$	11,662,864		$	11,554,913		$	12,838,013		$	13,215,970		$	12,212,231
Total earning assets	10,913,069			10,899,109			12,089,939			11,916,007			11,140,307
Securities	2,033,436			2,548,590			2,223,417			1,769,878			1,918,604
Total loans	8,335,309			6,825,847			8,081,519			9,502,428			9,043,253
Allowance for credit losses	(96,270)			(106,094)			(127,302)			(63,575)			(61,469)
Total intangible assets	24,483			26,619			34,819			599,377			551,743
Total deposits	10,327,269			10,068,953			10,215,808			10,335,977			8,982,381
Total borrowings	125,509			110,844			571,637			827,550			1,517,816
Total shareholders’ equity	954,062			1,182,435			1,187,773			1,758,564			1,552,918

Table of Contents


	At or For the Years Ended December 31,
	2022			2021			2020			2019			2018
Selected Operating Data:
Total interest and dividend income	$	387,257		$	329,065		$	409,782		$	509,513		$	465,894
Total interest expense	42,660			37,899			93,000			144,255			109,694
Net interest income	344,597			291,166			316,782			365,258			356,200
Fee income	63,995			84,462			69,990			76,824			74,026
All other non-interest income/(loss)	4,942			58,786			(3,683)			7,178			298
Total net revenue	413,534			434,414			383,089			449,260			430,524
Provision for credit losses	11,000			(500)			75,878			35,419			25,451
Total non-interest expense	288,716			285,893			840,239			289,857			266,893
Income/(loss) from continuing operations before income taxes	113,818			149,021			(533,028)			123,984			138,180
Income tax expense/(benefit) from continuing operations	21,285			30,357			(19,853)			22,463			28,961
Net income/(loss) from continuing operations	92,533			118,664			(513,175)			101,521			109,219

(Loss)/income from discontinued operations before income taxes	—			—			(26,855)			(5,539)			(4,767)
Income tax (benefit)/expense from discontinued operations	—			—			(7,013)			(1,468)			(1,313)
Net (loss)/income from discontinued operations	—			—			(19,842)			(4,071)			(3,454)
Net income/(loss)	$	92,533		$	118,664		$	(533,017)		$	97,450		$	105,765

Basic earnings/(loss) per common share:
Continuing operations	$	2.03		$	2.41		$	(10.21)		$	2.06		$	2.38
Discontinued operations	—			—			(0.39)			(0.08)			(0.08)
Total basic earnings/(loss) per share	$	2.03		$	2.41		$	(10.60)		$	1.98		$	2.30

Diluted earnings/(loss) per common share:
Continuing operations	$	2.02		$	2.39		$	(10.21)		$	2.05		$	2.36
Discontinued operations	—			—			(0.39)			(0.08)			(0.07)
Total diluted earnings/(loss) per share	$	2.02		$	2.39		$	(10.60)		$	1.97		$	2.29

Weighted average common shares outstanding - basic	45,564			49,240			50,270			49,263			46,024
Weighted average common shares outstanding - diluted	45,914			49,554			50,270			49,421			46,231

Dividends per preferred share	$	—		$	—		$	1.20		$	1.84		$	1.76
Dividends per common share	$	0.54		$	0.48		$	0.72		$	0.92		$	0.88

Asset Quality and Condition Ratios: (3)
Net loans charged-off/average loans	0.27		%	0.29		%	0.41		%	0.35		%	0.18		%
Allowance for credit losses/total loans	1.15			1.55			1.58			0.67			0.68
Loans/deposits	81			68			79			92			101



Capital Ratios:
Tier 1 capital to average assets - Company	10.18		%	10.49		%	9.38		%	9.33		%	9.04		%
Total capital to risk-weighted assets - Company	14.60			17.32			16.10			13.73			12.99
Tier 1 capital to risk-weighted assets - Company	12.60			15.30			14.06			12.30			11.57


Shareholders’ equity/total assets	8.18			10.23			9.25			13.31			12.73

Table of Contents

(1) All performance ratios are annualized and are based on average balance sheet amounts, where applicable.

(2) Fully taxable equivalent considers the impact of tax advantaged investment securities and loans.

(3) For periods prior to 2020, generally accepted accounting principles require that loans acquired in a business combination be recorded at fair value, whereas loans from business activities are recorded at cost. The fair value of loans acquired in a business combination includes expected credit losses, and there is no loan loss allowance recorded for these loans at the time of acquisition. Accordingly, the ratio of the loan loss allowance to total loans is reduced as a result of the existence of such loans, and this measure is not directly comparable to prior periods. Similarly, net loan charge-offs are normally reduced for loans acquired in a business combination since these loans are recorded net of expected credit losses. Therefore, the ratio of net loan charge-offs to average loans is reduced as a result of the existence of such loans, and this measure is not directly comparable to prior periods. Other institutions may have loans acquired in a business combination, and therefore there may be no direct comparability of these ratios between and among other institutions.

Table of Contents

Average Balances, Interest and Average Yields/Cost

Item 7 - Table 3 - Average Balance, Interest and Average Yields / Costs


	2022						2021						2020
(Dollars in millions)	Average Balance		Interest		Average Yield/ Rate		Average Balance		Interest		Average Yield/ Rate		Average Balance		Interest		Average Yield/ Rate

Assets
Loans: (1)(2)
Commercial real estate	$	3,836.2	$	167.7	4.37	%	$	3,600.2	$	124.4	3.46	%	$	3,958.6	$	151.5	3.83	%
Commercial and industrial loans	1,435.3		74.7		5.20		1,527.6		71.8		4.70		2,049.4		87.7		4.28
Residential loans	1,784.2		63.3		3.55		1,560.4		58.4		3.75		2,324.3		87.8		3.78
Consumer loans	556.8		32.1		5.77		569.1		22.0		3.87		828.1		31.3		3.78
Total loans	7,612.5		337.8		4.44		7,257.3		276.6		3.81		9,160.4		358.3		3.91
Investment securities (2)(3)	2,489.7		51.2		2.06		2,283.6		49.4		2.16		1,845.2		54.6		2.96
Short-term investments and loans held for sale (4)	569.1		4.9		0.86		1,619.4		2.3		0.58		767.2		4.4		0.64
Mid-Atlantic region loans held for sale	—		—		—		179.5		7.1		3.97		25.2		0.4		1.07
Total interest-earning assets	10,671.3		393.9		3.69		11,339.8		335.4		2.60		11,798.0		417.7		3.55
Intangible assets	26.8						32.0						316.1
Other non-interest earning assets (4)	648.5						684.1						747.1
Total assets	$	11,346.6					$	12,055.9					$	12,861.2
Liabilities and shareholders' equity
Deposits:
NOW and other	$	1,416.7	$	6.1	0.43	%	$	1,340.2	$	1.0	0.07	%	$	1,216.6	$	3.5	0.29	%
Money market	2,809.1		13.8		0.49		2,749.7		5.3		0.19		2,713.6		15.3		0.56
Savings	1,114.8		0.4		0.03		1,067.7		0.5		0.05		914.1		0.9		0.10
Certificates of deposit	1,541.7		13.1		0.85		1,978.9		18.6		0.94		3,102.9		52.5		1.69
Total interest-bearing deposits	6,882.3		33.4		0.49		7,136.5		25.4		0.36		7,947.2		72.2		0.91
Borrowings and notes (5)	176.1		9.2		5.24		320.2		10.7		3.34		841.6		20.7		2.46
Mid-Atlantic region interest-bearing deposits	—		—		—		335.1		1.8		0.54		45.0		0.1		0.80
Total interest-bearing liabilities	7,058.4		42.6		0.60		7,791.8		37.9		0.49		8,833.8		93.0		1.06
Non-interest-bearing demand deposits	2,914.9						2,817.4						2,324.6
Other non-interest-bearing liabilities (4)	180.1						280.9						281.4
Total liabilities	10,153.4						10,890.1						11,439.8
Total shareholders' equity	1,193.2						1,165.8						1,421.4
Total liabilities and equity	$	11,346.6					$	12,055.9					$	12,861.2

Net interest income			$	351.3					$	297.5					$	324.7

Table of Contents


	2022					2021					2020
(Dollars in millions)	Average Balance		Interest	Average Yield/ Rate		Average Balance		Interest	Average Yield/ Rate		Average Balance		Interest	Average Yield/ Rate
Net interest spread				3.09	%				2.12	%				2.49	%
Net interest margin (6)				3.26					2.60					2.72
Cost of funds				0.43					0.35					0.84
Cost of deposits				0.34					0.26					0.71
Interest-earning assets/interest-bearing liabilities				151.19					149.67					133.95

Supplementary data
Total non-maturity deposits	$	8,255.5				$	7,975.0				$	7,168.9
Total deposits	9,797.2					9,954.0					10,271.8
Fully taxable equivalent adjustment	6.6					6.3					6.4

Notes:

(1) The average balances of loans include nonaccrual loans, and deferred fees and costs. As of December 31, 2022 and December 31, 2021, deferred fees related to PPP loans totaled $0.1 million and 0.2 million, respectively.

(2) The yield on tax-exempt loans and securities is computed on a fully tax-equivalent basis using a tax rate of 27%.

(3) The average balance of investment securities is based on amortized cost.

(4) Includes discontinued operations.

(5) The average balances of borrowings and notes include the capital lease obligation presented under other liabilities on the consolidated balance sheet.

(6) Purchase accounting accretion totaled $2.0 million, $6.7 million, and $9.9 million for the years-ended December 31, 2022, 2021, and 2020, respectively. The effect of purchase accounting accretion on the net interest margin was an increase in all years, which is shown sequentially as follows beginning with the most recent year and ending with the earliest year: 0.02%, 0.09%, and 0.12%.

Table of Contents

Rate/Volume Analysis

Item 7 - Table 4 - Rate Volume Analysis


	2022 Compared with 2021						2021 Compared with 2020
	(Decrease) Increase Due to						(Decrease) Increase Due to
(In thousands)	Rate		Volume		Net		Rate		Volume		Net

Interest income:
Commercial real estate	$	34,681	$	8,582	$	43,263	$	(14,027)	$	(13,071)	$	(27,098)
Commercial and industrial loans	7,397		(4,501)		2,896		7,962		(23,913)		(15,951)
Residential loans	(3,179)		8,061		4,882		(762)		(28,622)		(29,384)
Consumer loans	10,572		(482)		10,090		704		(10,014)		(9,310)
Total loans	49,471		11,660		61,131		(6,123)		(75,620)		(81,743)
Investment securities	(2,468)		4,316		1,848		(16,598)		11,341		(5,257)
Short-term investments and loans held for sale (1)	4,968		(2,335)		2,633		(5,508)		2,980		(2,528)
Mid-Atlantic region loans held for sale	—		(7,120)		(7,120)		(1,480)		8,600		7,120
Total interest income	$	51,971	$	6,521	$	58,492	$	(29,709)	$	(52,699)	$	(82,408)

Interest expense:
NOW accounts	$	5,053	$	62	$	5,115	$	(2,832)	$	327	$	(2,505)
Money market accounts	8,402		116		8,518		(10,259)		201		(10,058)
Savings accounts	(204)		23		(181)		(536)		137		(399)
Certificates of deposit	(1,593)		(3,839)		(5,432)		(18,740)		(15,233)		(33,973)
Total deposits	11,658		(3,638)		8,020		(32,367)		(14,568)		(46,935)
Borrowings	4,568		(6,010)		(1,442)		5,691		(15,702)		(10,011)
Mid-Atlantic region interest-bearing deposits	—		(1,820)		(1,820)		814		1,006		1,820
Total interest expense	$	16,226	$	(11,468)	$	4,758	$	(25,862)	$	(29,264)	$	(55,126)
Change in net interest income	$	35,745	$	17,989	$	53,734	$	(3,847)	$	(23,435)	$	(27,282)

Table of Contents

NON-GAAP FINANCIAL MEASURES

The Company utilizes the non-GAAP measure of adjusted 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 securities gains/losses, merger costs, restructuring costs, goodwill impairment, and discontinued operations.

In 2022, the restructuring expense adjustment primarily related to the termination of leasehold interests and the write-down of related right of use assets and leasehold improvements in conjunction with branch consolidations and real estate reductions.

In 2021, the Company recorded a third quarter net gain of $52 million on the sale of the operations of the insurance subsidiary and the Mid-Atlantic branch operations. Expense adjustments in the first quarter 2021 were primarily related to branch consolidations. Third quarter 2021 adjustments included Federal Home Loan Bank borrowings prepayment costs. They also included other restructuring charges for efficiency initiatives in operations areas including write-downs on real estate moved to held for sale and severance related to staff reductions. The fourth quarter 2021 revenue adjustment was primarily related to trailing revenue on a previously reported sale, and the expense adjustment was due primarily to branch restructuring costs.

Discontinued operations are the Company’s national mortgage banking operations for which the Company completed the wind down of operations in 2020. Merger costs consist primarily of severance/benefit related expenses, contract termination costs, systems conversion costs, variable compensation expenses, and professional fees. There were no merger costs in 2020. Restructuring costs generally consist of costs and losses associated with the disposition of assets and liabilities and lease terminations, including costs related to branch sales. Restructuring costs also include severance and consulting expenses related to the Company’s strategic review. They also include costs related to the consolidation of branches. Restructuring expense and other for 2020 primarily related to executive separation expense as a result of the CEO transition.

Due to the anticipated earnings volatility resulting from loan loss provisions reflecting changes in estimates of uncertain future economic conditions under the new CECL accounting standard, many users of bank financial statements are focusing on Pre-Provision Net Revenue (“PPNR”). This is a measure of revenue less expenses, and is calculated before the loan loss provision and income tax expense. This measure gives clearer visibility of the operations of the company during the periods presented in the income statements, without the impact of period-end estimates of future uncertain events. This measure also enhances comparisons of operations across different banks, which might have significantly different period-end estimates of uncertain future economic conditions that affect the loan loss provision. Consistent with its previous practices measuring results on an adjusted basis before the impacts

Table of Contents

of acquisitions, divestitures, and other designated items, the Company has introduced the measure of Adjusted Pre-Provision Net Revenue (“Adjusted PPNR”) which measures PPNR excluding adjustments for items not viewed as related to ongoing operations. This measure is now integral to the Company’s analysis of its operations, and is not viewed as a substitute for GAAP measures of net income. Analysts also use this measure in assessing the Company’s operations and in making comparisons across banks. The Company and analysts also measure Adjusted PPNR/Assets in order to utilize the PPNR measure in assessing its comparative operating profitability. This measure primarily relies on the measures of adjusted revenue and adjusted expense already used in the Company’s calculation of its efficiency ratio.

The Company also adjusts certain equity related measures to exclude intangible assets due to the importance of these measures to the investment community.

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


	At or For the Years Ended
(Dollars in thousands)		December 31, 2022		December 31, 2021		December 31, 2020
GAAP Net income/(loss)		$	92,533	$	118,664	$	(533,017)
Non-GAAP measures
Adj: Loss on securities, net		2,031		787		7,520
Adj: Goodwill impairment		—		—		553,762
Adj: Net gains on sale of business operations		—		(52,942)		(1,240)

Adj: Acquisition, restructuring, conversion, and other related expenses (1)		8,909		5,781		5,839




Adj: Loss from discontinued operations before income taxes		—		—		26,855
Adj: Income taxes		(2,940)		11,696		(29,342)

Net non-operating charges		8,000		(34,678)		563,394
Total adjusted net income (non-GAAP)		$	100,533	$	83,986	$	30,377


GAAP Total revenue from continuing operations		$	413,534	$	434,414	$	383,089
Adj: Loss on securities, net		2,031		787		7,520
Adj: Net gains on sale of business operations		—		(52,942)		(1,240)


Total adjusted operating revenue (non-GAAP)		$	415,565	$	382,259	$	389,369


GAAP Total non-interest expense from continuing operations		$	288,716	$	285,893	$	840,239
Less: Total non-operating expense (see above)		(8,909)		(5,781)		(5,839)

Less: Goodwill impairment		—		—		(553,762)


Adjusted operating non-interest expense (non-GAAP)		$	279,807	$	280,112	$	280,638

Pre-tax, pre-provision net revenue (PPNR) from continuing operations		$	124,818	$	148,521	$	(457,150)
Adjusted pre-tax, pre-provision net revenue (PPNR)		135,758		102,147		108,731

(in millions, except per share data)
Total average assets		$	11,347	$	12,056	$	12,861
Total average shareholders' equity		1,193		1,166		1,421
Total average tangible shareholders equity		1,166		1,134		1,105
Total average tangible common shareholders equity		1,166		1,134		1,088
Total tangible shareholders’ equity, period-end		930		1,153		1,153
Total tangible common shareholders’ equity, period-end		930		1,153		1,153
Total tangible assets, period-end		11,638		11,525		12,803

Total common shares outstanding, period-end (thousands)		44,361		48,667		50,833
Average diluted shares outstanding (thousands)		45,914		49,554		50,308





Earnings/(loss) per share, diluted		$	2.02	$	2.39	$	(10.60)
Plus: Net adjustments per share, diluted		0.17		(0.70)		11.20
Adjusted earnings per share, diluted		2.19		1.69		0.60
Book value per common share, period-end		21.51		24.30		23.37
Tangible book value per common share, period-end		20.95		23.69		22.68
Total shareholders' equity/total assets		8.18		10.23		9.25
Total tangible shareholders' equity/total tangible assets		7.99		10.00		9.01

Table of Contents


	At or For the Years Ended
(Dollars in thousands)		December 31, 2022			December 31, 2021			December 31, 2020
Performance Ratios
GAAP return on assets		0.82		%	0.98		%	(4.15)		%
Adjusted return on assets		0.89			0.70			0.24
GAAP return on equity		7.76			10.18			(37.46)
Adjusted return on equity		8.43			7.20			2.14
Adjusted return on tangible common equity		8.94			7.74			3.18
Efficiency ratio (2)		64.31			69.96			68.53

Supplementary Data (in thousands)
Tax benefit on tax-credit investments		$	4,880		$	4,372		$	4,699
Non-interest income charge on tax-credit investments		(3,508)			(3,445)			(3,645)
Net income on tax-credit investments		1,372			928			1,054
Intangible amortization		5,134			5,200			6,181
Fully taxable equivalent income adjustment		6,644			6,344			6,402

(1)Acquisition, restructuring, conversion, and other related expenses included no merger and acquisition expenses for the years -ended December 31, 2022, 2021 and 2020.

(2)Efficiency ratio is computed by dividing total core tangible non-interest expense by the sum of total net interest income on a fully taxable equivalent basis and total core non-interest income adjusted to include tax credit benefit of tax shelter investments. The Company uses this non-GAAP measure to provide important information regarding its operational efficiency.

GENERAL

This discussion is intended to assist readers in understanding the financial condition and results of operations of Berkshire Hills Bancorp, Inc. (“Berkshire” or the ~~Company.~~ “Company"), the changes in key items in the Company’s Consolidated Financial Statements (“financial statements”) from year to year, and the primary reasons for those changes.

The objectives of this section are:

•To provide a narrative explanation of the Company’s financial statements that enables investors to see the company through the eyes of management;

•To enhance the financial disclosure and provide the context within which financial information should be analyzed; and

•To provide information about the quality of, and potential future variability of, the Company’s earnings and cash flow.

This discussion includes the following sections:

•Summary

•Comparison of Financial Condition at December 31, 2022 and 2021

•Comparison of Operating Results for the Years Ended December 31, 2022 and 2021

•Liquidity and Cash Flows

•Capital Resources

•Application of Critical Accounting Policies

•Enterprise Risk Management

•LIBOR Transition

•Environmental, Social, Governance (ESG) and Commitment to Social Responsibility

The following discussion and analysis should be read in conjunction with the ~~Consolidated Financial Statements "financial statements"~~Company’s financial statements and ~~accompanying~~the notes ~~contained~~thereto appearing in Item 8 of this ~~report.~~

~~SUMMARY~~

~~2017 was a transformational~~document. In the following discussion, income statement comparisons are against the previous year ~~for Berkshire. Major accomplishments included:~~

~~Growing revenue by more than 40%~~

~~Gaining a major position in Worcester - an important regional market~~

~~Moving~~and balance sheet comparisons are against the ~~corporate headquarters to Boston and expanding the Boston market team~~

~~Crossing the $10 billion threshold for total assets~~

~~Completing the largest acquisition and largest public stock offering since its initial public offering~~

~~Critical components~~previous fiscal year-end, unless otherwise noted. Operating results discussed herein are not necessarily indicative of the ~~year’s progress~~results for the year 2023 or any future period. In management’s discussion and analysis of financial condition and results of operations, certain

Table of Contents

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 ~~acquisition of Worcester-based Commerce Bancshares Corp. (“Commerce”) in October~~discussion, unless otherwise specified, references to earnings per share and ~~the integration of Princeton, NJ area First Choice Bank (“First Choice”) acquired in December 2016.~~ "EPS" refer to diluted earnings per common share.

Berkshire is ~~now the largest regional banking company~~a Delaware corporation headquartered in Boston and the ~~third largest~~holding company for Berkshire Bank (“the Bank”) Established in 1846, the Bank operates as a commercial bank under a Massachusetts trust company charter.

SUMMARY

The Company’s vision is to be a high performing, leading socially responsible community bank in New ~~England.~~England and beyond. It offers a wide range of banking, investment, and financial services through its lines of business that include Commercial Banking, Retail Banking, Consumer Lending, Wealth Management, Private Banking, and its 44 Business Capital national SBA lending division. Berkshire’s vision is to empower the financial potential of its stakeholders by making banking available where, when, and how it's needed through a committed focus on exceptional customer service, digital banking, and positive community impact.

Berkshire is committed to unleashing the financial potential of all its stakeholders by leveraging its more than 175 years of expertise, leading performance on environmental, social and governance (ESG) matters and best-in-class fintech partnerships. Its differentiated DigiTouchSM approach, a powerful combination of personal service, including its MyBanker program, fused with the convenience of user-centric technology, targets high customer satisfaction and a frictionless experience.

Berkshire continued to drive forward its performance and make meaningful progress towards its Berkshire’s Exciting Strategic Transformation (BEST) goals in 2022. The Company ~~views itself as well positioned~~increased its operating profitability during the year. Fourth quarter revenue and earnings per share reached a fourth quarter record. Due to ~~serve~~$52 million in gains recorded on the ~~needs and support the growth~~sale of ~~Greater Boston, the sixth largest combined statistical area~~operations in the ~~country. Throughout the~~third quarter of 2021, total full year ~~the Company maintained a focus on improving profitability through scale, business mix selection, and ongoing management of expenses.~~net profit decreased year-over-year by 22% to $93 million ($2.02 per share) in 2022 from $119 million ($2.39 per share) in 2021.

Total revenue increased by 41% in 2017 and reached an annualized level of $463 million in the fourth quarter, which included the newly acquired Commerce operations. Full year pre-tax earnings increased by 29% to $100 million. Federal income tax reform near year-end lowered the future statutory tax rate but necessitated a write-down of the net deferred tax asset. This resulted in an $18 million provisional non-cash charge at the end of 2017 which reduced income after taxes to $55 million in 2017 from $59 million in the prior year.

The Company uses the non-GAAP measure of adjusted earnings to assess its performance. This measure excludes items not viewed as related to ongoing operations. These items were presented and ~~related metrics,~~reconciled to ~~evaluate~~GAAP measures in a previous section of this Item 7. The major exclusions were sale gains in 2021 and branch consolidation costs in both years. Adjusted earnings increased year-over-year by 20% to $101 million in 2022 from $84 million in 2021. Adjusted earnings per share increased by 30% to $2.19 from $1.69 and also reflected the ~~results~~benefit of share repurchases during both years.

The improvement in operating earnings was driven by positive operating leverage resulting from an 18% increase in net interest income and disciplined expense management. Net interest income benefited from the increase in interest rates and from 22% loan growth in the environment of favorable credit conditions during the year. Loan growth exceeded 10% in most major loan categories. Approximately 55% of total loan growth was recorded in residential mortgages, as the Company reinvested excess liquidity into higher yielding loans in conjunction with the expansion of the residential mortgage function serving the Company’s markets.

At year-end 2022, the Company arrived at the midpoint of its ~~operations.~~three year BEST strategic transformation plan. Fourth quarter 2022 results achieved the objective of moving into the target range of the plan for several key measures. A summary of the Company’s progress against these key targets is shown below.

Table of Contents

The Company’s BEST plan includes a focus on improving Berkshire’s capital structure. In June 2022, the Company issued a $100 million Sustainability Bond, a subordinated debt issuance which replaced at a lower rate of interest a $75 million bond which was called and repaid. The Company intends to use an amount equal to the net proceeds to finance or refinance new or existing social and environmental projects consistent with its Sustainable Financing Framework, which was established at midyear. In conjunction with this issuance, the Company received an inaugural investment grade long-term issuer rating of "Baa3", with a Positive rating outlook, from Moody’s Investors Service.

During 2022, the Company repurchased $125 million of common stock, representing 9% of shares outstanding at the start of the year. After year-end 2022, the Company announced a $50 million share repurchase program for 2023, representing approximately 4% of year-end 2022 outstanding shares. During the fourth quarter of 2022, the Company increased its quarterly common shareholder dividend by 50% to $0.18 per share from $0.12 per share. Total shareholder distributions from dividends and stock repurchases equaled $149 million in 2022, or 16% of year-end 2021 total equity. The Company remains strongly capitalized, with a 12.4% Common Equity Tier 1 Capital ratio at year-end 2022.

The improving credit environment in 2022 was reflected in the reduction in the ratio of the allowance for expected credit losses on loans to total loans; this ratio decreased to 1.15% at year-end 2022 from 1.55% at year-end 2021. This included the release of reserves related to the pandemic as expected elevated losses did not emerge due in part to the ongoing benefit from federal economic support measures. Net loan charge-offs measured 0.27% of average loans in 2022, compared to 0.29% in 2021. The ratio of total delinquent and nonaccrual loans measured a ten year low of 0.60% of loans at year-end 2022.

Inflation remained historically high throughout 2022, leading the Federal Reserve Bank to initiate a series of interest rate increases during the year, along with taking steps towards quantitative tightening. The three month U.S. Treasury rate increased by 436 basis points to 4.42% from 0.06% during the year. The increases were concentrated in the third quarter, with the target Federal Funds rate increasing by 300 basis points from mid-June to the beginning of November. The ten year Treasury rate increased during the year by 236 basis points to 3.88% from 1.52%. The

Table of Contents

Company’s interest rate sensitivity at the start of the year was modeled to be positively sensitive to increases in interest rates, which contributed to the growth in net interest income during the year.

The risk of recession has increased due to ongoing inflation, the higher interest rate environment, and the gradual reduction of excess liquidity in the economy. The Company views its markets as comparatively less sensitive to national trends in the economy and is pursuing strategies to continue to grow and improve operating profitability. The Company plans to roll out its new digital and mobile banking services in 2023. Its goal is that its DigiTouchSM customer engagement strategy and corporate responsibility profile will allow it to differentiate and grow profitably and responsibly in the anticipated environment where deposit costs and competition may further pressure funding costs.Optimization of digital platforms and reductions of excess premises are targeted to contribute additional efficiencies.

In October 2022, Chief Financial Officer Subhadeep Basu resigned, and Chief Accounting Officer Brett Brbovic was named Interim Chief Financial Officer. In January 2023, the Company named David Rosato as Senior Executive Vice President/Chief Financial Officer, effective February 6, 2023. Mr. Rosato was most recently Chief Financial Officer of Peoples United Financial, Inc., which was acquired by M&T Bank Corporation in 2022. Also in January 2023, the Company named James Brown as Senior Executive Vice President/Head of Commercial Banking and Philip Jurgeleit as Executive Vice President/Chief Credit Officer, filling vacancies in these positions resulting from retirements in the second half of 2022. Messrs. Brown and Jurgeleit have decades of related experience in the Company’s markets, including Boston Private Bank and Trust Company for Mr. Brown and Santander Bank for Mr. Jurgeleit.

Berkshire remains positively positioned to continue forward with its BEST program financial objectives while also enhancing its social and environmental performance. The Company was named one of America’s Most Trustworthy Companies by Newsweek, listed in the Bloomberg Gender Equality Index, named a Best Place to Work for LGBTQIA+ equality by the Human Rights Campaign and honored as the Sustainable Business of the Year in the bank category by the Sustainable Business Network of Massachusetts. Additionally, Berkshire accelerated further ahead of its BEST ESG performance goal, moving into an aggregated 17th percentile performance in an index of leading ESG ratings and ranked in the top 1% of U.S. banks in Bloomberg throughout the year. The Company continues to differentiate itself through its high performance on ESG matters and commitment to its communities.

COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31, 2022 AND DECEMBER 31, 2021

Summary:Total assets were little changed in 2022, measuring $11.7 billion at year-end. Excess liquidity was reinvested into loan growth. A $0.9 billion decrease in cash and equivalents and a $0.5 billion decrease in investment securities were mostly offset by a $1.5 billion increase in loans. Total deposits increased by $0.3 billion, and the ratio of loans to deposits increased to 81% from 68% during the year. Most measures of asset quality remained strong and improving. Shareholders’ equity decreased by $228 million primarily due to an other comprehensive loss from unrealized bond losses in the environment of rising interest rates. Shareholder distributions in the form of dividends and stock repurchases reflected the Company’s plan to reduce excess capital through loan growth and shareholder distributions. The Common Equity Tier 1 Capital ratio remained strong at 12.4% at year-end. Year-end 2022 book value per share measured $21.51 and the non-GAAP measure of tangible book value per share measured $20.95. These measures were reduced by approximately $3.93 per share as a result of the after-tax unrealized bond loss.

Investments: Short-term investments decreased by $978 million, or 64%, to $540 million, or 5% of period-end assets, as excess liquid funds were reinvested into loans in the rising rate market.

The portfolio of investment securities decreased by $515 million, or 20%, to $2.03 billion, measuring 17% of period-end assets, compared to 22% at the start of the year. The Company allowed net run-off of investment securities to provide funds for loan growth. The net runoff tempered the Company’ exposure to unrealized bond losses in the rising interest rate environment. This helped to offset the impact of a lengthening of securities average lives due to slower prepayments of the mortgage related securities which constitute the bulk of the portfolio. Excluding short-term treasury securities, net monthly run-off from proceeds of maturities, amortization, and prepayments of investment securities was approximately $20 million per month based on conditions at year-end 2022.

Table of Contents

The portfolio is high quality, and has an average debt securities life of 6.9 years at period-end, which was increased from 4.6 years at the start of the year due primarily to slowing prepayment speeds of mortgage related instruments resulting from the significant increase in interest rates. The investment portfolio yield was 2.20% in the fourth quarter of 2022, compared to 2.04% in the fourth quarter of 2021. The investment portfolio is viewed as a significant source of liquidity for the Bank, as 93% of the $1.4 billion available for sale bond portfolio consists of Agency mortgage related products and Treasury notes.

The portfolio of available for sale investment securities had an unrealized loss of $238 million, or 14.3% of cost at year-end 2022, compared to an unrealized loss of $4 million, or 0.2% of cost, at year-end 2021, due to the impact of rising interest rates during 2022. The unrealized loss is a component of other comprehensive income but has no impact on bank regulatory capital. If portions of this loss were recognized through sale, this would reduce regulatory capital. The Company monitors the impact of the unrealized loss on the book value of capital and it views its position as within the range of peers in the current environment. Based on year-end 2022 conditions, the unrealized loss is expected to accrete into book value as the bond portfolio seasons through its 6.9 year average life with the expectation that the securities return to a par value at maturity.

Total Loans. Total loans increased by $1.51 billion, or 22%, to $8.34 billion in 2022. Growth was concentrated in residential real estate loans, which increased by $823 million, or 55%, to $2.31 billion. Commercial loans increased by $634 million, or 13%, to $5.52 billion. In addition to ~~charges~~improved customer demand and expansion of the Company's lending teams, loan growth in 2022 was impacted by slower prepayment rates due to the rising rate environment during the year.

Berkshire has expanded its residential mortgage lending function to be more in line with its strategic positioning in its markets and in order to reinvest excess liquidity that had accumulated from loan run-off in earlier periods. The majority of originations were produced by an expanded team of in-house mortgage originators. The Company has also been developing third party mortgage channels, including flow originations from correspondents in its markets. This expansion produced high mortgage growth in 2022 despite the market contraction resulting from rising interest rates. Most production shifted towards jumbo 7/1 adjustable-rate mortgages that were held for investment. The Company has also expanded its secondary marketing capabilities with a goal of increasing the volume of conforming mortgages originated for sale in future periods. The Company’s goal is to build customer relationships from this portfolio. The mortgage loan yield decreased to 3.56% in the fourth quarter of 2022, compared to 3.82% in the fourth quarter of 2021, reflecting shifts in the product mix. Due to the lag in application and processing pipelines, the portfolio yield began to increase in the latter part of the year from the flow of higher rate new originations.

Commercial loan growth in 2022 resulted from the expansion of the commercial team, together with solid credit demand and supportive economic and credit conditions. Commercial loans had declined in earlier periods and reached a growth inflection point in the fourth quarter of 2021, with growth in all four quarters of 2022. For the year, major areas of growth were in commercial multifamily loans, non-owner occupied commercial real estate, and asset-based lending commercial and industrial balances. These real estate loans were spread across most of the major categories or property types. The Company measures its commercial real estate loans in accordance with regulatory monitoring guidelines and definitions. Total commercial real estate measured 259% of regulatory capital at year-end 2022 and construction loans measured 26% of regulatory capital.

Through loan selection, the Company shifted commercial real estate loan production towards credits with lower loan-to-value ratios during the year to reduce impacts of potential future recessionary conditions on property valuations.The Company manages commercial real estate loan concentrations within limits by property type.Due to potential shifts in workforce patterns, commercial office loans are subject to heightened monitoring.Excluding construction loans and medical and educational properties, the commercial office portfolio totaled approximately $548 million at year-end 2022, consisting primarily of suburban properties.There were no office property loans delinquent at that date.

Inflation has contributed to an increase in commercial borrowing demand, while the related increase in interest rates has raised borrowing costs, potentially restraining demand. The gathering impact of higher rates is expected to dampen economic conditions, resulting in potentially slower portfolio growth in future periods. Due primarily to commercial loans tied to short term indices, such as LIBOR or Prime, the commercial loan yield increased by 2.06% to 5.78% in the fourth quarter of 2022 from 3.72% in the fourth quarter of 2021. The Company’s

Table of Contents

underwriting includes an analysis of sensitivity to higher interest rates for most of its variable rate loans. Many of the larger variable rate commercial loans are backed by interest rate swaps which have the impact of fixing the interest cost to the borrower, thereby reducing the credit risk of higher interest rates.

After midyear, the Company announced that it would cease originating new loans in its Firestone Financial specialty lending; operation and allow the portfolio to run-off. This was a strategic decision in the context of Berkshire’s BEST plan to focus on core markets and products. The Firestone portfolio stood at $133 million at period-end and continues to have strong credit performance in line with its long history.

Consumer loans increased by $53 million, or 12%, to $501 million in 2022. Growth was driven by consumer unsecured loans originated through the Company’s partnership with the fintech Upstart. This portfolio totaled $140 million at period-end, and most of these loans were originated during the first half of the year and were generally subject to the Company’s prime underwriting standards. In July 2022 the Company announced that, due to the prevailing economic uncertainty, it was ceasing new originations through this partnership. Credit performance of this portfolio has exceeded the Company’s expectations. The yield on the consumer portfolio increased to 7.00% in the fourth quarter of 2022 from 3.96% in the fourth quarter of 2021 due to both the higher yield on Upstart loans and the increase in the Prime rate which is the index rate for most home equity loans.

Overall loan yields increased from the fourth quarter of 2021 due mainly to increases in market interest rates, primarily in relation to loans repricing within three months. The Company measures its loan beta, which is the ratio of the change in loan yields to a market index. Compared to the average federal funds target rate, the beta for the total loan portfolio measured 51% comparing the fourth quarter of 2022 to the fourth quarter of 2021. Comparing the most recent quarter to the linked quarter, the loan beta was 42%. The magnitude and consistency of these betas primarily reflects the large volume of loans contractually repricing based on Prime. LIBOR, or SOFR based indices.

At year-end 2022, 45% of total loans were scheduled to mature or reprice within three months. contributing to the modeled asset sensitivity of the Company’s interest rate risk profile at that date. This is down from 50% at year-end 2021.

Asset Quality and Credit Loss Allowance:Most major asset quality metrics remained solid as of year-end 2022, with many metrics at better levels than pre-pandemic. Total delinquent and non-accruing loans measured 0.60% of total loans at year-end, the lowest in more than a decade. Non-accruing loans measured 0.37% of total loans, compared to 0.52% at year-end 2021. Annualized net loan charge-offs measured 0.27% of average loans in 2022, compared to 0.29% in 2021. Charge-offs were concentrated in the second half of the year in one commercial and industrial credit which filed for bankruptcy in the fourth quarter. The $7 million remaining carrying balance of this loan was the largest component of year-end non-accruing commercial and industrial loans. Non-accruing loans declined in other major loan categories.

At period-end, accruing troubled debt restructurings totaled $12 million and accruing loans over 90 days delinquent totaled $7 million. Total criticized loans decreased to 2.3% of loans from 3.5% of loans at the start of the year, including classified loans which decreased to 1.4% of loans from 2.1% of loans. Classified loans include accruing substandard loans, which are regarded as potential problem loans and which declined to 1.1% of loans from 1.6% during the year.

The allowance for credit losses on loans decreased to $96 million at year-end 2022 from $106 million at year-end 2021. The ratio of the allowance to total loans decreased to 1.15% from 1.55%. This decline was primarily due to a reduction in the expected losses from economic and social disruptions related to ~~tax reform, adjusting~~COVID-19 conditions, as well as the general improvement in asset quality measures. The year-end allowance was based on a baseline economic forecast of ongoing economic growth but included a qualitative assessment of risks related to market and inflation conditions and future possible recession conditions. The allowance covers all current expected credit losses for all loans. In relation to outstanding loans, the allowance for all categories of loans decreased except for consumer loans due to the addition of the Upstart loans. The expected average lives of most categories of loans increased during the year, reflecting the strong portfolio growth and slower expected prepayment speeds.

Deposits and Borrowings:Total deposits increased by $258 million, or 3%, to $10.3 billion during 2022. Excluding the $474 million increase in payroll deposits and the $107 million decrease in brokered deposits, total deposits decreased by $109 million, or 1%, due primarily to a $156 million, or 5%, decrease in non-interest bearing

Table of Contents

demand deposit balances. The payroll deposits fluctuate daily, and totaled $1.48 billion at year-end, most of which was in money market deposit balances at year-end.

Deposit activity included the impact of increased customer spending rates as well as market competition from higher yielding investment instruments in the rising interest rate environment. The Company increased its promotions of time and money market accounts tied to demand deposit accounts.

The fourth quarter cost of deposits increased year-over-year by 0.50% to 0.69% by from 0.19%, including a 0.36% increase over the third quarter of 2022. The cost of interest-bearing deposits increased by 0.70% to 0.98% from 0.28% due primarily to a 1.00% increase in the cost of money market deposits to 1.16% in the fourth quarter of 2022 from 0.16% in the fourth quarter of 2021.

The Company measures its deposit beta, which is the ratio of the change in deposit costs to a market index. Compared to the average federal funds target rate, the deposit beta measured 25% for the fourth quarter of 2022 compared to the linked quarter. The deposit beta measured 0.14% for the fourth quarter of 2022 compared to the fourth quarter of 2021, which was the last full quarter before the Federal Reserve Bank began raising interest rates. The Company anticipates that the deposit beta will continue to increase into a possible range of 30-40% by the end of the interest rate cycle, depending in part on shifts in balances from lower cost accounts to higher cost accounts.

The Company’s wholesale funds consist of brokered deposits and borrowings. Wholesale funds decreased by $93 million, or 27%, to $246 million, or 2% of assets, from $340 million, or 3% of assets, in order to reduce the balance of higher cost funds.

On June 30, 2022, Berkshire completed the sale at par of $100 million in subordinated notes bearing interest at a fixed rate of 5.5% for the first five years. The notes will then reset quarterly to a floating rate per annum equal to a benchmark rate which is expected to be the Three-Month Term SOFR, plus 249 basis points. The notes have a ten year final maturity and generally may be called at par after five years. Berkshire is the first public U.S. community bank holding company with under $150 billion in total assets to issue a Sustainability Bond. The Company intends to use an amount equal to the net proceeds of its Sustainability Bond issuance to finance or refinance new or existing social and environmental projects consistent with its Sustainable Financing Framework. Sustainalytics, a Morningstar Company, and the global leader in high-quality ESG research, ratings, and data, has independently verified that Berkshire’s Sustainable Financing Framework "is credible and impactful and in alignment with” International Capital Market Association (ICMA) guidelines and principles.

On September 28, 2022, the Company prepaid the balance of its existing $75 million in subordinated debt bearing interest at 6.875% which became callable for the first time on that date since the original issuance ten years ago.

Derivative Financial Instruments: The notional amount of derivative financial instruments totaled $4.52 billion at year-end 2022, compared to $3.71 billion at year-end 2021.The increase was primarily due to $800 million in interest rate swaps and collars on commercial loans recorded as cash flow hedges in the second half of the year. This was in response to the increased sensitivity to a downward interest rate shock following the rapid rise in market interest rates during the year.The fair value of derivative financial instruments was a liability of $43 million at year-end 2022, compared to an asset of $43 million at year-end 2021, due to the impact of changes in interest rates on the value of outstanding commercial loan interest rate swaps.

Shareholders' Equity: Total shareholders’ equity decreased by $228 million, or 19% to $954 million in 2022. This decrease was primarily due to a $178 million net other comprehensive loss resulting mostly from the previously discussed unrealized loss on debt securities available for sale as a result of the increase in market interest rates. Additionally, the Company repurchased $125 million in common shares in 2022, representing approximately 9% of shares outstanding at year-end 2021.

The unrealized securities losses are not counted against regulatory equity. As a result, the decrease in regulatory capital was more modest and reflected shareholder distributions through stock repurchases and dividends. Including the impact of the loan growth, the Common Equity Tier 1 Capital remained relatively strong, decreasing to 12.4% from 15.0 at the start of the year. Similarly, the risk-based capital ratio remained comparatively strong at 14.6% compared to 17.3% at the start of the year.

Table of Contents

Across the banking industry, the unrealized losses on available for sale investment securities have led to significant compression of book value and the non-GAAP financial measure of tangible book value. The Company’s

book value per share decreased by $2.79 to $21.51 and period-end equity/assets decreased from 10.2% to 8.2%. Tangible book value per share decreased by $2.74 to $20.95, and the period-end ratio of tangible common equity/tangible assets decreased from 10.0% to 8.0%. The 2022 comprehensive loss on bonds represented approximately $3.93 per share of the decreases in the above per share book value metrics.

During the first nine months of 2022, the Company continued the quarterly shareholder dividend at $0.12 per share level it was reduced to as a result of the pandemic beginning in the third quarter of 2020. On November 4, 2022, the Company announced that it had increased its quarterly dividend to shareholders by 50% to $0.18 per share. This reflected growth in earnings since the announcement of the BEST strategic transformation plan in May 2021. The $0.18 dividend represented a yield of approximately 2.6% based on Berkshire’s closing share price of $27.44 on November 3, 2022 and was equivalent to a 29% payout compared to third quarter 2022 adjusted earnings.

Total shareholder distributions through stock repurchases and dividends measured $149 million in 2022. In January 2023, the Company announced a new 2023 stock repurchase program totaling $50 million, which was equivalent to approximately 4% of outstanding shares based on the share price at the time of the announcement.

Table of Contents

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Summary: Berkshire reported net income of $93 million, or $2.02 per share in 2022, compared to net income of $119 million, or $2.39 per share in 2021. In 2021, the Company recorded a pre-tax gain of $53 million on the sale of its Mid-Atlantic branch operations and its insurance and other operations. The Company uses the non-GAAP measure of adjusted income to assess its performance, with component measures of adjusted revenue and adjusted expense. These measures exclude items ~~in 2017 included merger costs, securities~~not viewed as related to ongoing operations, including the 2021 sale gains and ~~the termination of contracts related~~consolidation expenses in both years.

Adjusted income increased in 2022 by 20% to ~~premises~~$101 million compared to $84 million in 2021. This reflected a 9% increase in adjusted revenue and ~~interest rate hedges. GAAP earnings~~flat adjusted non-interest expense. Adjusted income per share ~~declined~~increased by 30% in 2022 to ~~$1.39~~$2.19 from $1.69 in ~~2017 from $1.88~~2021. This reflected the further benefit of stock repurchases in ~~the prior year, while adjusted EPS improved by 4% to $2.29 from $2.20. Similarly, the GAAP return on assets decreased to 0.56% from 0.74%, whereas the adjusted ROA improved by 8% to 0.93% from 0.86%.~~ both years.

The ~~Company is targeting to improve this measure to over 1.00% and views its 2017 results as strong progress towards this goal. The GAAP~~2022 return on equity measured ~~4.45% in 2017,~~7.76% and the non-GAAP measure of adjusted return on tangible common equity measured ~~11.82%~~8.94%.

~~Berkshire’s primary metrics of financial condition generally improved~~ Reflecting the improvement during the year, ~~including capital, liquidity,~~these measures reached 10.06% and asset quality. While the economic climate has been supportive, the Company remains vigilant with its financial disciplines with a goal to maintain our operations and soundness when industry circumstances become more challenging. The Federal Reserve Bank increased short term interest rates during the year, which also resulted in a flattening of the yield curve. The Company estimated that these movements were positive for its financial results. Business development resulted in 8% organic loan growth and 6% organic deposit growth, measured before the Commerce impact. Driven by fee income, non-interest income grew by 91%, reaching 30% of total revenue, and including the benefit of specialty lending and mortgage banking operations acquired in 2016.

Due to the shares issued as merger consideration for Commerce, together with shares issued in a public offering for general corporate purposes in May, total year-end common shares outstanding increased by 27% to 45.3 million, and year-end shareholders’ equity increased by 37% to $1.5 billion. The increase in equity included 522 thousand preferred shares with a book value of $41 million. Both book value per common share and the non-GAAP measure of tangible book value per share increased by 5% during the year, including the benefit of new shares issued.

~~Table of Contents~~

~~Berkshire increased the quarterly common dividend by 5% in January 2017, and this was followed by another increase of 5% declared in January 2018.~~

~~Berkshire relocated its corporate headquarters to 60 State Street in Boston, which is well located~~9.83% respectively in the downtown financial hub. It now has four offices serving Boston and a total of 19 offices in the Greater Boston area, including Worcester. Berkshire recruited commercial and private banking leadership for this market, along with commercial leadership for the Mid-Atlantic operations, and seasoned specialists in international and government banking. Berkshire continues to expand its virtual teller and MyBanker resources to cost-effectively strengthen its sales and service channels.

The Company consolidated three branch offices and opened two new branches during the year. By year-end, full time equivalent staff totaled nearly 2,000 positions. In conjunction with the federal tax reform, Berkshire announced additional investments in its team and communities, including an increase in the minimum wage, bonuses for most employees, investments in training at AMEBU (America’s Most Exciting Bank University), and a $2 million contribution to Berkshire’s foundation which provides community charitable support. Berkshire crossed the $10 billion regulatory threshold for total assets with a goal that future Commerce-related earnings accretion will more than offset higher regulatory costs and will provide support for further profitability improvement.

~~COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31, 2017 AND 2016~~

~~Summary:~~ Berkshire offers a competitive mix of loan and deposit products to serve the retail and commercial markets in its regions, and in certain national specialty lending markets. Net interest income from these products is its primary revenue source; the related staff, facilities, and systems are its primary operating expenses. The Company emphasizes services and fee revenue business to deepen market and wallet share and to diversify revenues. Additionally, increasing regulatory requirements related to capital and liquidity have led to more emphasis on products and services that do not require balance sheet resources. The Company has expanded its wholesale lending and deposit practices to provide more product and balance sheet flexibility.

Berkshire continued to extend, deepen, and diversify its banking footprint in 2017, with total assets of $11.6 billion at year-end. Total assets increased by $2.4 billion, or 26%, including $1.8 billion acquired with Commerce. Most categories of assets and liabilities increased due to this merger. Excluding acquired Commerce balances, organic loan growth from business activities was $0.5 billion, or 8%, and organic deposit growth was $0.4 billion, or 6%.

Shareholders’ equity increased by $0.4 billion, or 37%, mostly due to the stock issued in the stock offering and as merger consideration. Berkshire also benefited from strong internal capital generated from operations. There was improvement in most primary metrics related to capital, liquidity, and asset quality.

~~Investment Securities.~~ Berkshire’s goal is to maintain a high quality portfolio consisting primarily of liquid investment securities with managed durations, supported primarily by wholesale funds. The portfolio generates interest income and provides additional liquidity and interest rate risk management flexibility. The portfolio is managed to contribute to earnings per share and return on equity, taking into account regulatory risk classifications.

~~The Company continuously evaluates the portfolio’s size, yield, diversification, risk, and duration.~~

In 2017, the portfolio average yield increased despite ongoing interest rate pressures in medium term instruments. Due to its size, Berkshire created earnings synergy by restructuring the mix of acquired Commerce short and long term investments - contributing to the targeted earnings accretion of that acquisition. Portfolio growth was also targeted to leverage the excess capital from the May common stock offering, reducing the near-term EPS dilution from the new shares while the Commerce acquisition was pending, and to supplement loan growth as a use of this capital.

Total investment securities increased by $270 million, or 17%, to $1.9 billion in 2017, including a $114 million balance contributed by the Commerce acquisition. The portfolio increase included a $199 million increase in available for sale agency collateralized mortgage obligations and a $74 million increase in held to maturity municipal bonds, as these remain the primary components of the portfolio, balancing interest rate sensitivity and yield. The Company also increased its investment in available for sale corporate bonds by $55 million, with the growth concentrated in financial institution subordinated debt securities.

~~Table of Contents~~

The Company sold equity securities, producing a $20 million net reduction in these securities and realizing $13 million in total net securities gains. These gains were already included as a component of shareholders’ equity in accumulated other comprehensive income. This sale took advantage of strong market conditions for bank stocks and the realized capital gains contributed to the Company’s tax management objectives. The Company’s available for sale equities portfolio totaled $45 million at year-end 2017, consisting mostly of northeast bank stocks and high yield equities. The adoption of ASU 2016-01 requires that current period unrealized gains and losses on these securities be recognized in income beginning in 2018. The Company is assessing its strategies in light of these requirements.

~~The fourth~~final quarter portfolio yield decreased slightly to 3.55% from 3.58% from year-to-year, while the full year yield increased to 3.43% from 3.28%. Due to the federal tax reform, the Company estimated that the fully taxable equivalent yield of the securities portfolio would decrease by approximately 0.15% in future periods. This is primarily due to the municipal bond portfolio, which continues to meet the Company’s profitability objectives despite the lower taxable equivalent yield.

The year-end weighted average life of the bond portfolio decreased slightly to 5.5 years from 5.9 years. The Company estimates that the average life of the portfolio would increase to 8.7 years in the event of a 300 basis point increase in interest rates. Debt securities not meeting investment grade criteria totaled $70 million at year-end 2017 and consisted primarily of unrated bank debt securities acquired in the Commerce merger, as well as certain high yield corporate bonds. There were no impairments recorded during the year or at year-end, and all securities were performing during the year and at year-end. For securities available for sale and held to maturity, the fair value of securities with unrealized losses exceeding one year was 13% of total securities at year-end 2017, compared to 2% at the prior year-end. The total unrealized loss on these securities was 3% of fair value at year-end 2017. This generally reflected lower market prices resulting from higher market rates rather than credit changes in the portfolio. The net unrealized gain on investment securities decreased to $11 million, or 0.6% of cost, at year-end 2017, compared to $20 million, or 1.3% of cost, at year-end 2016. This change primarily reflected the equity securities gains recognized on sale, as well as lower bond prices related to higher medium term interest rates at the end of 2017.

~~Loans.~~ Berkshire is expanding and deepening retail and commercial lending activities through organic growth and acquisitions, including a focus on specialized lending. The Company uses secondary markets and a growing network of financial institution partners in managing and diversifying its portfolio, as well as supporting its fee income objectives and managing its capital and liquidity.

Total loans increased by $1.75 billion, or 27%, to $8.3 billion in 2017. The Commerce acquisition added $1.24 billion in balances, including $1.09 billion in commercial loans split between commercial real estate and commercial and industrial loans. Most of the Commerce loan portfolio is located in the Eastern Massachusetts markets. The Commerce loans were preliminarily valued at a $102 million, or 7.6%, discount, which was primarily due to the Commerce portfolio of taxi medallion loans located in Boston and Cambridge and reflects the adverse conditions in this business due to ride-sharing competition. Commerce also engaged in other specialty and non-conforming commercial lending activities which contributed to the discount.

Excluding the Commerce acquisition, loans increased by $509 million, or 8% in 2017. This growth included $223 million in commercial and industrial loans, $72 million in commercial real estate, and $162 million in net growth in residential mortgages. Total commercial loans increased organically by 8% and, including the Commerce balances, commercial loans increased to 61% of total loans from 56% at the start of the year. The Company views its commercial and industrial loans and its owner occupied commercial real estate loans as an important element of its commercial relationship strategies. These loans increased by 44% to $2.35 billion in 2017 and advanced to 46% of total commercial loans at year-end 2017. Berkshire also engages in commercial loan participations and other wholesale activities as part of its balance sheet management objectives. Berkshire recruited commercial banking leadership for its expanding Greater Boston region and in its new Mid-Atlantic markets. The Company’s goal is to gain market share based on its expansion into these large and growing markets, including its positioning as the largest regional bank with corporate headquarters in Boston.

~~Table of Contents~~

Due to its asset management strategies in recent years, Berkshire has been positioned to support its markets while also managing well within regulatory guidelines for commercial real estate lending. Berkshire’s total non-owner occupied commercial real estate exposure measured 270% of regulatory capital at period-end, compared to 265% at the start of the year and compared to the 300% regulatory monitoring guidelines (based on regulatory definitions). Construction loan exposure was 40% of bank regulatory capital at year-end both in 2017 and 2016, compared to the 100% regulatory guideline. Berkshire monitors its commercial real estate lending risk using the enhanced processes required for banks exceeding the monitoring thresholds even though it is well margined below those thresholds.

Berkshire’s commercial specialty lending includes asset based lending, business equipment lending, and SBA lending. ABL outstandings totaled $306 million at year-end 2017. Business equipment loans, through Berkshire’s Firestone division, totaled $227 million at that date. The Bank originates SBA 7(a) loans for sale through its 44 Business Capital division (primarily in the mid-Atlantic area), as well as direct loans by its business banking teams throughout its regions. Based on the annual SBA national originations rankings as of September 30, Berkshire placed 17^th ~~nationally by SBA loan count and it placed 32~~^nd ~~nationally for total amount loaned. Most earnings related to SBA lending are included in loan fee income, from the sale of guaranteed portions of SBA loans.~~

Residential mortgages increased by $210 million, or 11%, in 2017 including $48 million contributed by the Commerce acquisition. Organic growth measured 9%. Conforming mortgage originations are produced by Berkshire’s national mortgage banking operation and are generally held for sale to the secondary market. Mortgage banking income and activity are addressed in the later fee income section of this discussion. Loans held for investment are primarily jumbo loans for which there is a more limited secondary market. Residential mortgage balances were also affected by opportunistic wholesale activity of seasoned loans, with purchases totaling $125 million and sales totaling $294 million. Consumer loan growth in 2017 totaled $150 million, or 15%, including $100 million in acquired Commerce consumer loans. Berkshire produced $59 million, or 10%, growth in auto and other loans, which was concentrated in prime indirect auto loans originated by the Company’s team in its regional markets.

The average fourth quarter loan yield increased to 4.47% in 2017 from 4.00% in 2016, reflecting the benefit of short term rate increases as well as the contributions from the fair value marked First Choice and Commerce loans and the favorable shift in mix towards higher yielding commercial loans. The fourth quarter yield increased in all major loan categories. The contribution to the net interest margin from purchased loan accretion was 0.21% and 0.10% in the above two periods respectively. The repricing terms of the total loan portfolio shortened modestly in 2017, with 42% repricing in one year, 22% in one to five years, and 36% over five years. This reflects the shift in mix towards shorter duration commercial loans. As of year-end 2016, 40% of the portfolio was scheduled to reprice within one year, 20% in one to five years, and 40% over five years.

~~Asset Quality.~~ Berkshire’s Chief Risk Officer and a Risk Management and Capital Committee of the Board oversee risk management and asset quality. This includes setting loan portfolio objectives, maintaining sound underwriting, close portfolio oversight, and careful management of problem assets and potential problem assets. Additionally, merger due diligence is an integral component of maintaining asset quality. Acquired loans are recorded at fair value and are deemed performing regardless of their payment status. Therefore, some overall portfolio measures of asset quality are not comparable between years or among institutions as a result of recent business combinations. A general goal is to achieve significant resolutions of impaired loans acquired in bank mergers generally in the first two years following the acquisition date. Berkshire’s asset quality has reflected its strong credit disciplines together with the generally favorable economic environment in the extended U.S. recovery and asset values supported by the low inflation environment.

Asset quality metrics remained favorable and generally improved in 2017. Net loan charge-offs measured 0.19%. At period-end, non-performing assets were 0.21% of total assets. At year-end, the total contractual balance of purchased credit impaired loans was $209 million, with a $97 million carrying value, representing a $112 million discount, which is a 54% discount from the contractual amount. Due to the Commerce acquisition, the contractual balance more than doubled from $87 million at the start of the year, and the carrying balance more than doubled from $47 million. Included in this amount at year-end 2017 was a $12 million accretable balance including $11 million added with the Commerce acquisition.

~~Table of Contents~~

The Company views its problem asset metrics as generally low and benefiting from the extended period of national economic recovery and monetary stimulus following the 2008 financial crisis. Net loan charge-offs were 0.19% of average loans in 2017, compared to 0.21% in the prior year. Year-end 2017 non-performing assets totaled $24 million, or 0.21% of total assets, compared to $22 million, or 0.24% of total assets, at the start of the year. For loans from business activities, net loan charge-offs measured 0.19% of average loans in 2017, while this measure was 0.17% for average loans acquired in business combinations.

~~Loan Loss Allowance~~. The determination of the allowance for loan losses is a critical accounting estimate. The Company’s methodologies for determining the loan loss allowance are discussed in Item 1 of this report, and Item 8 includes further information about the accounting policy for the loan loss allowance and the Company’s accounting for the allowance in the Consolidated Financial Statements.

The Company considers the allowance for loan losses appropriate to cover probable incurred losses which can be reasonably estimated and which are inherent in the loan portfolio as of the balance sheet date. Under accounting standards for business combinations, acquired loans are recorded at fair value with no loan loss allowance on the date of acquisition. The fair value of acquired loans includes the impact of estimated loan losses for the life of the portfolio, including subjective assessments of risk. A loan loss allowance is recorded by the Company for the emergence of new probable and estimable losses relating to acquired loans which were not impaired as of the acquisition date. In the first period of combined operations, the Company may also establish an environmental component of the allowance related to newly acquired loans. Because of the accounting for acquired loans, some measures of the loan loss allowance are not comparable to periods prior to the acquisition date or to other financial institutions. Due to the Commerce acquisition, loans acquired in business combinations totaled $2.2 billion, or 26% of total loans at year-end 2017, compared to $1.3 billion, or 20% of total loans at year-end 2016.

The loan loss allowance increased by $8 million, or 18%, to $52 million in 2017. Due to the addition of the Commerce loans at fair value with no allowance on the merger date, this ratio decreased to 0.62% at year-end 2017 compared to 0.67% at year-end 2016. For business activities loans, the ratio of the allowance remained unchanged at 0.75%. For acquired loans, due to the addition of Commerce at fair value, this ratio decreased to 0.27% from 0.33%, and net charge-offs totaled $3 million. The year-end allowance provided 3.9X coverage of total net charge-offs, compared to 3.5X coverage in 2016. The allowance provided 2.3X coverage of year-end non-accrual loans in 2017 compared to 2.0X in 2016.

The credit risk profile of the Company’s loan portfolio is described in Note 7 - Loan Loss Allowance of the Consolidated Financial Statements. The Company’s risk management process focuses primary attention on loans with higher than normal risk, which includes loans rated special mention and classified (substandard and lower). These loans are referred to as criticized loans. Including acquired loans, they totaled $188 million, or 1.6% of total assets at year-end 2017, compared to $129 million, or 1.4% of total assets at year-end 2016. Acquired criticized loans increased by $54 million due to the Commerce acquisition. Criticized loans from business activities increased by $5 million and there was a significant shift from substandard to special mention loans, indicating improved condition of the portfolio. The Company views its potential problem loans as those loans from business activities which are rated as classified and continue to accrue interest. These loans have a possibility of loss if weaknesses are not corrected. Classified loans acquired in business combinations are recorded at fair value and are classified as performing at the time of acquisition and therefore are not generally viewed as potential problem loans. In 2017, potential problem loans decreased to $37 million from $51 million at the start of the year.

As discussed in Note 1 - Summary of Significant Accounting Policies of the Consolidated Financial Statements, in June 2016, the FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments.” The ASU requires companies to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Forward-looking information will now be used in credit loss estimates. ASU No. 2016-13 is effective for interim and annual periods beginning after December 15, 2019. Early application will be permitted for interim and annual periods beginning after December 15, 2018. The Company is evaluating the provisions of ASU No. 2016-13, and will closely monitor developments and additional guidance to determine the potential impact on the Company's consolidated financial

~~Table of Contents~~

statements. The Company is in the process of identifying and implementing required changes to loan loss estimation models and processes and evaluating the impact of this new accounting guidance, which at the date of adoption is expected to increase the allowance for credit losses with a resulting negative adjustment to retained earnings. It is anticipated that banks will generally carry higher loan loss allowance estimates as a result of this change and that loan loss estimates will be made at acquisition date for loans acquired in business combinations.

~~Other Assets.~~ Short term investments increased by $116 million due to the overnight liquidity needed for the acquired Commerce payroll processing business. Bank owned life insurance increased by $52 million due to the purchase of additional policies, together with the Commerce acquisition. Total goodwill and intangible assets increased by $135 million which was also due to Commerce. The net deferred tax asset increased by $6 million to $47 million, with the $18 million year-end provisional write-down resulting from federal tax reform mostly offsetting the increase resulting from the Commerce acquisition.

~~Deposits.~~ Berkshire views its deposit programs as central to it funding and market management goals. Retail and commercial strategies focus on transaction accounts as being key to customer relationships. Interest bearing deposit products are positioned to be competitive while offering local convenience and the safety of FDIC insurance. Due to the impacts of technology on mobile and electronic banking, preferred customer channels are shifting and the Company seeks to maximize the benefits it offers as a local provider with the scale to compete with the delivery channels of national bank and nonbank competitors. The Company has been active in shifting the number, location, and configuration of its offices and customer facing staff in order to move with its markets and to reduce overhead related to older channels that are now less favored. Current initiatives include the expansion of virtual tellers and MyBankers. The Company has also utilized brokered time deposits as an additional funds source to complement its other strategies, manage its funding costs, and to support interest rate risk management goals. With the Commerce acquisition, the Company has added a specialty payroll processing business line that processes payments for payroll service bureau customers. In 2017, Berkshire added a senior government banking professional to provide more outreach to municipal accounts in the Company’s regions. The Company has also added a senior international banking professional who is augmenting the Company’s payments related business.

Berkshire’s deposits increased in 2017 by $2.1 billion, or 32%, to $8.7 billion. The Commerce acquisition added $1.7 billion, including $0.5 billion in demand deposits, $0.8 billion in money market balances, and $0.3 billion in time deposits. Excluding Commerce, business activities resulted in 6% organic growth totaling $0.4 billion, including $0.1 billion, or 8% organic growth in money market balances and $0.3 billion, or 12% organic growth in time deposits. Time deposit growth included a $0.3 billion increase in brokered time deposits which were used to replace $0.2 billion in short term debt. Payroll deposits totaled $0.5 billion at year-end, including $0.1 billion in demand deposits and $0.4 billion in money market accounts. These balances fluctuate daily generally within a range of $0.2 - $0.5 billion, and totaled $0.3 billion at the time of the Commerce acquisition.

The Commerce acquisition added 16 branches in the Greater Boston area, including Worcester. Berkshire consolidated three branch offices in 2017, while opening two more, with another two scheduled to open in the first quarter of 2018. Excluding nonreciprocal brokered balances, average deposits per branch totaled $67 million at year-end 2017, compared to $60 million at the start of the year. The Bank is deploying its virtual teller technology in new offices and targeted existing offices. Berkshire continues to diversify its distribution network, including expanding its MyBanker and private banking teams and integrating more closely with its wealth management, investment services, small business, insurance, and other business lines. At year-end, the Bank had four offices operating in metro Boston, which serve the expanding regional team located at the new corporate headquarters on State Street.

The Commerce acquisition provided additional liquidity to Berkshire’s combined operations, as reflected in the loan/deposit ratio, which decreased to 95% at the end of the year from 99% at the start of the year. Berkshire uses brokered deposits flexibly in combination with short term borrowings in managing its liquidity position and earnings objectives. Brokered deposits totaled $1.2 billion at year-end 2017, measuring 14% of total deposits at the start of the year. Commercial deposits increased to 29% from 26% of deposits due to the commercial orientation of Commerce. At year-end, estimated uninsured deposits totaled $2.0 billion, or 27% of total nonbrokered deposits, compared to $1.4 billion, or 24%, at the start of the year.

~~Table of Contents~~

The cost of deposits increased to 0.66% in the fourth quarter of 2017, compared to 0.56% in the fourth quarter of the prior year. While all major deposit categories had increases, the total increase was primarily driven by a 0.18% increase in the cost of money market accounts and a 0.11% increase in the cost of time deposit accounts. Time deposit costs benefited from the amortization of purchased deposit discount related to the Commerce acquisition. Average one month treasury rates increased by 0.77% in the fourth quarter of 2017 compared to 2016. The 10 basis point increase in deposit costs has been more modest than the Company’s models, which assume that total deposit costs will increase over time by 40% of changes in market rates. The interest sensitivity of deposits in the current environment of expected future rate increases is a significant uncertainty in the banking industry, following the years of unusually low interest rates. The Company believes that it can benefit from the diverse regional conditions in which it operates, and also continues to emphasize relationship and transactions accounts to manage potential future deposit cost increases.

~~Borrowings and Other Liabilities~~. Nearly all of Berkshire’s senior borrowings at year-end were provided by the Federal Home Loan Bank of Boston under established relationship programs. The FHLBB is secured by a general pledge of assets primarily consisting of mortgage backed securities and residential mortgages. The Bank uses FHLBB borrowings to manage overnight liquidity and generally to provide funding for its investment portfolio. Other components of the Bank’s wholesale funding program include correspondent banks and brokerages, and brokered deposits. For contingency liquidity purposes, the Bank has short term credit arrangements with the Federal Reserve Bank and with certain national banks and brokerages, and the holding company maintains a line of credit. There has been no regular ongoing use of these arrangements. The Company evaluates its use of borrowings and of wholesale funds in general in managing its liquidity and strategic growth plans. This is further discussed in the following section on Liquidity.

Total borrowings decreased by $177 million, or 13%, in 2017, due to increased utilization of better priced brokered time deposits to provide wholesale funding. Most borrowings are short term. The weighted average rate on borrowings was 1.81% in the fourth quarter of 2017, compared to 1.63% in the fourth quarter of 2016. The Company terminated its cash flow hedges in February 2017 as further described in the following section. The benefit to interest expense of this termination was more than offset by the market interest rate increases which increased the cost of borrowings during the year.

~~Derivative Financial Instruments and Hedging Activities.~~ Berkshire utilizes derivative financial instruments to manage the interest rate risk of its borrowings, to offer these instruments to commercial loan customers for similar purposes, and as part of its residential mortgage banking activities. The instruments sold to commercial and residential mortgage customers are an important source of fee income and generally represent fixed rate contracts purchased by customers which are sold or offset by the Company with national counterparties. Derivatives related to mortgage banking vary seasonally and were not significantly changed at year-end 2017 compared to the start of the year.

The notional balance of derivative financial instruments increased to $2.5 billion at year-end 2017, compared to $2.2 billion at the start of the year. The increase in economic hedges related to commercial loan interest rate swaps was partially offset by the termination of $300 million in cash flow hedges which were fixing the cost of variable rate borrowings. The commercial loan interest rate swap derivatives include back to back hedges with national bank counterparties, along with risk participation agreements with dealer banks. This represents a 43% increase related to strong customer demand during the year.

The cash flow hedges were terminated in early February in conjunction with the integration of the acquired First Choice balance sheet, including excess deposits. The Company retired the one month rolling FHLB loans that were hedged by the terminated fixed payment interest rate swaps. The Company recorded a $7 million loss on this termination; this loss was already a component of shareholders’ equity in accumulated other comprehensive income. The swaps had a fixed pay rate of 2.3% with a remaining maturity of 2.3 years at the start of the year.

The net fair value of derivatives improved from a $3 million liability at year-end 2016 to a $3 million premium at year-end 2017. This was primarily due to the realization of the $7 million loss on the termination of the cash flow

~~Table of Contents~~

hedges. The $3 million premium at year-end 2017 included a $5 million premium in the mortgage pipeline (most of which has already been recognized in revenues), offset by a $2 million liability on the interest rate swap related to the economic development bond.

~~Stockholders’ Equity.Berkshire pursues a balance of capital to maintain financial soundness while using common equity efficiently with the goal to produce a strong~~2022 return on ~~equity~~assets measured 0.82% and a strong return on tangible equity to support opportunities for franchise growth. Long run growth in dividends and in both book value and tangible book value per share are also viewed as elements for shareholder value creation. A sound capital structure reduces risk and enhances shareholder return and access to capital markets to support the Company’s banking activities and the markets that it serves. In its payment of dividends, management of treasury shares, issuance of equity compensation, and balancing of capital sources, the Company strives to achieve a capital structure that is attractive to the investment community and which satisfies the policy and supervision purposes of the Company’s regulators. When Berkshire negotiates business combinations, it generally targets to use its common shares as a significant component of merger consideration and to balance the mix of cash and stock to arrive at targeted capital metrics based on the characteristics of the combined banks. The Company’s common stock is listed on the New York Stock Exchange. Its preferred shares are non-voting conditionally convertible stock owned by one individual who is also the Company’s largest holder of common stock as a result of the Commerce acquisition. These holdings are restricted pursuant to an agreement filed with the SEC.

In May 2017, Berkshire completed its first public common stock offering since 2009, in the amount of $153 million (net of offering costs). This offering was for general corporate purposes and was conducted under the Company’s universal shelf registration statement with the SEC. The offering resulted in the issuance of 4.64 million shares at $34.50 per share ($32.98 per share net of costs). Also, in October, the Company completed the acquisition of Commerce Bancshares for total consideration of $229 million in a stock for stock exchange. The Company issued 4.84 million common shares and 522 thousand shares of a new Series B non-voting conditionally convertible preferred stock in this exchange, and the consideration was valued based on the $38.95 closing price of Berkshire common stock on October 13, 2017. During 2017, the Company reinvested $100 million of the stock offering proceeds in Berkshire Bank as additional paid-in capital, with the remainder held in cash at the holding company at the end of 2017. The Company considered the equity-down streamed to the bank as offsetting most of the tangible equity dilution from the Commerce merger due to the $135 million increase in goodwill and intangible assets. The Company considered the equity retained at the holding company as providing an additional capital buffer and as a source of investment in the bank to support future growth as appropriate.

Total shareholders’ equity increased by $403 million, or 37%, to $1.5 billion in 2017. This included the benefit of the $382 million in stock issuances discussed above, together with retained earnings. Total common shares outstanding increased by 9.6 million shares, or 27%, to 45.3 million shares. Preferred stock was issued in the form of 522,000 shares, which are conditionally convertible into 1,044,000 common shares and bearing a dividend as preferred shares equal to twice the per share common dividend.

~~Berkshire’s return on equity decreased to 4.5% in 2017 due primarily to the provisional write-down of the deferred tax asset as a result of tax reform. The~~ non-GAAP measure of adjusted return on ~~tangible common equity~~assets measured 0.89%. For the final quarter, these measures increased to 1.08% and 1.00% respectively.

The measure of Pre-tax Pre-provision Net Revenue (“PPNR”) totaled $125 million in 2022, and the non-GAAP measure of adjusted PPNR totaled $136 million. For the final quarter, these measures totaled $48 million and $45 million, respectively.

Revenue: Total net revenue decreased by 5% year-over-year due to ~~11.8%~~the impact of the $53 million in sale gains in 2021. The non-GAAP measure of adjusted revenue excludes these gains and other gains and losses. Adjusted revenue increased by 9% due to an 18% increase in net interest income which was partially offset by a 22% decrease in non-interest income excluding gains and losses. Adjusted revenue comparisons between the two years were impacted by the sale of insurance operations and mid-Atlantic branch operations, which contributed to 2021 operating revenues for nine months before their sale.

Net Interest Income:Net interest income increased year-over-year by $53 million, or 18%. The netinterest margin increased by 25%, increasing by 66 basis points to 3.26% from ~~12.5%~~2.60%. The margin rose to 3.84% in the final quarter of the year. While average earning assets decreased year-over-year by 6%, the Company benefited from the $355 million, or 5% increase in average loans. The increase in the net interest margin reflected both from the benefit of higher interest rates, as well as the reinvestment of funds from short term investments into loans.

Per the early discussion of financial condition, the 2022 cumulative fourth quarter loan beta was 42%, while the deposit beta was 14%. This difference contributed substantially to the net interest income generated as the average target federal funds rate increased by 359 basis points to 3.84% in the fourth quarter of 2022 compared to 0.25% in the fourth quarter of 2021.

The shift from low yielding short-term investments into higher yielding loans also contributed to the increase in net interest income during the year. Additionally, the shift from some investment securities into loans further supported the increase in net interest income.

The Company’s models anticipate that the full cycle deposit beta will be in the 30-40% range. The Company anticipates that the increase in deposit costs may cause a reduction in the net interest margin in future periods based on the interest rate outlook at year-end 2022. The Company’s models indicate that the Company had modest positive interest rate sensitivity at year-end 2022, as discussed in Item 7A on market risk.At year-end 2022, market expectations anticipated further increases in short-term interest rates in 2023.

Non-Interest Income: Total fee income decreased year-over year by $20 million, or 24%. All major categories of fee income decreased except for deposit related fees, which increased by $2 million, or 7%. Insurance fees decreased by $7 million due to the sale of insurance operations in 2021. Loan fees decreased by $13 million, or 38%, primarily due to an $8 million decrease in SBA originations related revenues reflecting changes in the ~~excess equity during~~structure of the ~~year between~~program and market spreads. Berkshire remained among the ~~May stock offering~~top 20 bank originators of SBA 7-A

Table of Contents

guaranteed loans in the U.S. Additionally, loan servicing fee revenue decreased by $2 million due to an outsourcing initiative in 2022. Mortgage banking fees decreased by $2 million, or 89%, as most mortgage originations were designated held for investment.

Provision for Credit Losses on Loans: The loan loss provision was an expense of $11 million in 2022 compared to a benefit of $500,000 in 2021. In both years, provision expense benefited from a release of reserves for expected pandemic related credit losses which did not emerge, including the impact of government support measures. The year-over-year increase also reflected the resumption of loan growth in 2022 compared to loan contraction in 2021. The Company has steadily reduced the coverage of its allowance for credit losses on loans based on improvements in asset quality and credit loss expectations. The balance of the allowance for credit losses on loans decreased to $96 million at year-end 2022 compared to $106 million at year-end 2021.

Non-Interest Expense:Comparisons of non-interest expense year-over-year were impacted by the sale of insurance and branch operations at the end of the third quarter of 2021 and the ~~completion of the Commerce acquisition~~reinvestment in ~~October.~~frontline bankers and technology. Comparisons are also affected by consolidation costs recorded in both years, primarily for branch consolidations, along with premises and operations initiatives.

Total non-interest expense increased year-over-year by $3 million, or 1%. Adjusted non-interest expense was flat. Restructuring and other non-operating expenses totaled $9 million in 2022 and $6 million in 2021. The Company ~~focuses on its internal generation~~consolidated six branch offices in 2022 and 16 branch offices in 2021. Including the 8 branches related to the mid-Atlantic branch operations which were sold, total branches decreased by 30 offices over the last two years to 100 branches at year-end 2022 compared to 130 branches at the beginning of ~~tangible equity~~2021.

Occupancy related expenses decreased year-over-year by $4 million, or 10%. Technology related expenses increased by $2 million, or 5%. Professional expense decreased year-over-year by $4 million, or 24%, due primarily to ~~support growth~~elevated charges in the first quarter of 2021. Total full-time equivalent staff measured 1,310 positions at period-end, compared to 1,319 positions at the end of 2021.

Reflecting the improved net interest margin and ~~dividends,~~strong expense control, as well as the exit from less efficient operations, the efficiency ratio improved to ~~support merger and other non-operating charges.~~

~~Berkshire’s capital metrics increased during~~64.3% in 2022 from 70.0% in 2021. This ratio improved to 58.3% in the final quarter of the year due to the ~~excess capital from the stock offering. The ratio~~cumulative impact of equity to assets increased to 12.9% from 11.9%, while the non-GAAP measure of tangible equity to assets increased to 8.5% from 7.7%. The Company generally targets to operate with this ratio in the 7-8% range. The consolidated risk based capital ratio increased to 12.4% from 11.9% including the excess cash held at the holding company. The Bank’s risk based capital ratio remained unchanged at 11.2%. Book value per common share increased by 5% to $32.14 and tangible book value also increased by 5% to $19.83 per common share.

~~Table of Contents~~

One of the requirements of the $10 billion Dodd Frank threshold is increased capital stress testing processes. The Company has invested in staff and resources to develop these processes. Based on its most recent internal modeling of financial condition as of year-end 2016, the Company expected to remain well capitalized under the most severe stress test assumptions based on its capital and dividend structure at that date. The Company plans to informally submit to regulators a stress test based on year-end 2017 dataimprovements during the ~~year 2018. The Company’s first formal submission of a stress test is planned for 2019.~~year.

~~Table of Contents~~

~~COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016~~

~~Summary:~~ Berkshire’s results in 2017 included growth from acquisitions and a significant amount of charges, viewed as non-operating, which depressed GAAP results. Based on its adjusted measures, discussed further below, Berkshire produced improvement in its earnings per share and ROA measures, which are its primary strategic focus.

Berkshire’s 2017 results include the First Choice operations acquired in December 2016, including the targeted efficiencies which resulted from the integration of these operations in 2017. Results also included the Commerce operations acquired in October 2017, and the Company is targeting efficiencies in 2018 from the planned integration of those operations. Due to these business combinations, most measures of revenue, expense, income, and average balances increased in 2017 compared to 2016. Additionally, per share measures were affected by the issuance of shares as merger consideration, together with the stock offering in May 2017 which was simultaneous with the Commerce announcement. All acquisitions were targeted to be accretive to earnings and earnings per share when fully integrated, and to provide a long term double digit return on equity.

As noted previously, Berkshire uses a non-GAAP measure of adjusted net income to supplement its evaluation of its operating results. Adjusted net income excludes certain amounts not viewed as related to normalized operations. These items are primarily related to acquisition expenses. Berkshire views its net acquisition related costs as part of the economic investment for its acquisitions. These investments are intended to contribute to long term earnings growth and franchise value. Other significant charges excluded in 2017 from the adjusted earnings measure included contract termination costs for premises restructuring and the termination of hedges. These were mostly offset by the realization of gains on the sale of equity securities. The Company also recorded an $18 million charge for the provisional write-down of its net deferred tax asset following the enactment of federal tax reform near year-end. This reform is believed to contribute positively to shareholder value due to the reduction in the federal statutory tax rate beginning in 2018. Berkshire also makes references to adjusted revenues and adjusted expenses in its discussion of operating results. Please see the Non-GAAP reconciliation section of this report for more discussion and information about adjusted net income and other non-GAAP financial measures discussed in this report.

Net income decreased in 2017 by 6% to $55 million, while adjusted net income increased by 33% to $91 million. On a per share basis, net income decreased by 26% to $1.39, while adjusted net income increased by 4% to $2.29. The Company targets ongoing improvement in this measure to benefit from its investments in organic growth and acquisitions, and to improve profitability. Return on assets decreased by 24% to 0.56%, while adjusted return on assets increased by 8% to 0.93% as the Company moved closer to its target of 1.00% or higher. The federal tax reform and efficiencies from the Commerce integration are targeted to support further improvement in this measure in 2018.

The return on equity decreased by 31% to 4.5% while the adjusted return on equity decreased by 3% to 7.3% due to the excess equity on hand in 2017 while the Commerce merger was pending. The return on tangible common equity decreased by 5% to 11.8% due to the excess equity but continued to be important as a source of internal capital generation to support organic growth and dividends. The efficiency ratio increased by 3% to 60.0% due to the first full year including the acquired First Choice mortgage banking operations, which operate with narrower margins common to this business. Berkshire estimated that the efficiency of operations excluding mortgage banking improved to approximately 56%. This reflected the benefit of ongoing scale efficiencies and was achieved despite the higher regulatory cost burden as the Company crossed the $10 billion regulatory asset threshold.

~~Total Net Revenue.~~ Berkshire evaluates its top line with the measure of net revenue, which is the sum of net interest income and non-interest income. The Company also measures adjusted net revenue and adjusted net revenue per share in evaluating its growth strategies, operations, and strategies for generating positive operating leverage.

Total net revenue increased in 2017 by $122 million, or 41% to $420 million. On a pro-forma basis, as set forth in the consolidated financial statements, total 2017 revenue including the Commerce operations reached $480 million, with non-interest income providing 28% of total revenue. Revenue growth in 2017 included a 27% increase in net interest income and a 79% increase in fee income. Total revenue per share increased by 11% to $10.59, and on a pro forma basis with Commerce this measure increased to $10.81. These changes indicate the combined impact of the Commerce and First Choice acquisitions on Berkshire’s scale and business mix.

~~Table of Contents~~

~~Net Interest Income.~~ Net interest income is the primary contributor to revenue. Berkshire targets growth in net interest income based on increased business volumes related to market share gains in its markets. Pricing disciplines for loans and deposits target a balance of market share and profitability objectives, while taking into account credit, liquidity, and interest rate sensitivity objectives. The Company also borrows to fund an investment portfolio to contribute to income and profitability, together with other balance sheet objectives. Assets and liabilities acquired in business combinations are marked to market for carrying value and yield, and balance sheet adjustments are often made at or following the acquisition date to integrate the acquired balance sheet with the Company’s balance sheet. Net interest income includes significant components related to the amortization of purchase accounting adjustments and deferred items. The most significant component is purchased loan accretion related to recoveries on the resolution of acquired impaired assets, where Berkshire has regularly posted significant gains that are included in net interest income. These gains are difficult to forecast and are highly variable from quarter to quarter, and generally reflect the Company’s strong asset management capabilities and continued demand for higher yielding assets in the ongoing low rate environment. The chief focus of the Company’s market risk assessment in the sensitivity of interest income to changes in interest rates.

Annual net interest income increased by $63 million, or 27%, in 2017. As noted in the pro-forma statements in the Company’s SEC filings, the business combinations in 2016 were estimated to add $36 million in net interest income in the first year of combined operations based on the assumptions set forth therein. The Commerce pro forma estimated that it would add up to $20 million per quarter in revenue in the first year; the Company owned Commerce operations for most of the fourth quarter of 2017. Interest income also increased as a result of 8% organic increase in loans, funded primarily by the 6% organic increase in deposits. The 27% increase in net interest income was attributable to the 23% increase in average earning assets and the 3% increase in the net interest margin.

The net interest margin increased throughout 2017 from 3.21% in the fourth quarter of 2016 to 3.50% in the fourth quarter of 2017. The margin for the year improved to 3.40% in 2017 from 3.31% in 2016. Factors that contributed to the improvement in the margin included the mix shift towards higher yielding commercial loans, the increase in interest rates, the termination of the fixed payment cash flow hedges, generally low deposit betas (indicating low sensitivity to interest rate changes), and the benefit of purchase accounting initially related to First Choice and then to Commerce. The yield on earning assets increased for the year to 4.16% from 3.93%, while there was a smaller increase in the cost of funds to 0.77% from 0.69%. Berkshire’s sensitivity to interest rates is discussed in Item 7A. Generally, its loan assets tied to LIBOR and prime adjust quickly to interest rate increases, as do short term borrowings, while deposit rates move in line with market forces which have been slower to react than expected. Lending spreads in some areas were pressured by slower demand in 2017. The Company will be monitoring the impact of the tax reform for any competitive impacts on loan yields or deposit costs that might affect the margin in the future.

The Company measures the impact of purchased loan accretion on the net interest margin. This accretion totaled $15 million and contributed 0.17% to the margin in 2017, compared to $8 million and 0.11% in 2016. The recognition of accretion depends on strategies for managing purchased credit impaired loans which have significantly benefited net interest income but which are uncertain and may vary from quarter to quarter. The Company has also benefited from the amortization of discount on purchased time deposits, which is mostly recognized in the first year or two following a merger.

~~Non-Interest Income~~. Most of Berkshire’s non-interest income is fee income, including various revenue sources related to its operations. As previously discussed, Berkshire focuses on fee income to build more enduring customer relationships and to diversify away from potential volatility in net interest income. Fee income is the primary revenue source for two of the Company’s national lending businesses - mortgage banking and specialty equipment lending. Many fee income sources do not require as much investment in assets and consequently do not require as much support from regulatory capital. These revenues therefore have the potential to increase the Company’s return on assets and return on equity towards its long-term goals.

Fee income increased by $54 million, or 79% in 2017, and totaled $123 million for the year. Mortgage banking fees increased by $47 million to $54 million, representing the first full year of the acquired First Choice national

~~Table of Contents~~

mortgage banking operations. The First Choice mortgage banking business ranks among the top 50 U.S. mortgage banking originators. Berkshire originated $2.4 billion in total held for sale mortgages in 2017. Revenue recognition is based on interest rate lock commitments which generally are entered into before mortgages are originated. The Company targets approximately a 0.3% pre-tax profit margin measured as a percentage of total originations volume. The mortgage banking unit operates with a high percentage of variable costs, to support earnings during periods when volume declines. Direct costs of originations are netted against the total fee revenue reported.

Loan fees increased by $5 million to $21 million. Loan fees in 2017 included $9 million in SBA loan sale gains, $5 million in commercial loan interest rate swap fees, $3 million in gains on the sale of seasoned mortgages, and $2 million in asset based lending fees. The increase was primarily due to higher SBA loan volumes, and included increased cross-sale activities among the lending groups. Deposit related fees increased by $2 million, or 9%, to $27 million including the First Choice and Commerce contributions. Deposit related fees decreased to 0.38% of average deposits in 2017, compared to 0.43% in the prior year. This reflected the lower fee penetration of the acquired banks as well as the shift in mix towards commercial balances. Deposit fees in 2017 included $8 million in overdraft fees, $9 million in bank card fees, and $7 million in other service charge income. The Company expects that its card fee income will be reduced by $5-6 million per year based on the Durbin amendment to the Dodd Frank Act, as a result of crossing the $10 billion asset threshold. This reduction will begin in the second half of 2018.

Non-interest income in 2017 included $13 million in securities gains, a $7 million charge for the loss on the termination of hedges, and $3 million in other net charges. The securities gains were due to the equity securities sales described previously in the investment securities section. The loss on the termination of hedges was described previously in the derivative securities section. The $3 million in other net charges was due to a $9 million charge for the amortization of tax credit investments, which was more than offset by benefits to income tax expense as further discussed below. This charge was partially offset by $4 million in accrued income on bank owned life insurance contracts.

~~Provision for Loan Losses.~~ The provision for loan losses is a charge to earnings in an amount sufficient to maintain the allowance for loan losses at a level deemed adequate by the Company. The level of the allowance is a critical accounting estimate, which is subject to uncertainty. The level of the allowance was included in the discussion of financial condition. The provision for loan losses increased by $4 million, or 21%, to $21 million in 2017. The provision for loan losses exceeded net loan charge-offs and resulted in an increase in the loan loss allowance due to portfolio growth.

~~Non-Interest Expense.~~ Berkshire’s goal is to generate positive operating leverage, growing revenues through business expansion and maintaining expense management disciplines. Non-interest expense increases have generally been related to the Company’s growth, including the impact of acquisitions. The Company also invests in building its infrastructure and adding to its market teams, with a focus on fee generating business lines, as part of its long term strategy to occupy a leading position as a regional provider in its footprint. Additionally, the Company has invested in the increased compliance and risk management resources required for banks at the $10 billion threshold established in the Dodd Frank Act.

Non-interest expense includes amounts viewed by the Company as not related to recurring operations. These expenses are excluded from the Company’s non-GAAP measure of adjusted expense. The primary component of these expenses is merger related expense, which totaled $25 million in 2017 and $14 million in 2016. These expenses related mostly to the Commerce and First Choice acquisitions. Most First Choice merger related expenses have been recorded. The Company has targeted $32 million in Commerce merger related expenses, of which $21 million was recorded in 2017 and the remainder is expected to be recorded in 2018. The Company recorded restructuring and other expense totaling $7 million in 2017 and $2 million in 2016, which was primarily related to premises lease terminations as the Company has right sized its facilities. In 2017, the Company recorded $3 million in employee and community investment expense for initiatives undertaken due to the federal tax reform. Total expenses excluded from the measure of adjusted expenses totaled $35 million in 2017 compared to $16 million in 2016.

Total non-interest expense increased by $96 million, or 47%, to $300 million in 2017. Adjusted expense, excluding items discussed above, increased by $77 million, or 41%, to $265 million. The largest expense growth was in

~~Table of Contents~~

compensation (46%), premises and technology (30%), and marketing (276%). The compensation and marketing expense changes were affected by the mortgage banking expense structure, which has higher variable compensation expense and marketing payments related to designated business channels. Expenses benefited from the First Choice integration, which was targeted to result in $15 million in annualized cost savings on completion of integration. The Commerce integration in 2018 is targeted to result in $8 million in such annualized savings. Expenses in 2017 also benefited from the restructuring initiatives early in the year which reduced ongoing overhead costs.

The efficiency ratio increased to 59.97% in 2017 from 58.27% in 2016. The acquired mortgage banking business operates with lower margins and therefore a higher efficiency ratio. The Company estimates that it operated with an efficiency ratio of approximately 56% in 2017 excluding mortgage banking. This demonstrates the ongoing benefit of the Company’s growth strategies. Berkshire had full time equivalent staff totaling 1,992 at year-end 2017, including the Commerce positions which were reported at 226 as of September 30, 2017. Berkshire reported 1,788 full time equivalent staff as of that date. Full time equivalent staff totaled 1,731 positions as of year-end 2016.

Income Tax ~~Expense.~~ Expense:Income taxes are discussed in a note to the ~~consolidated~~ financial statements; this note is important to an understanding of ~~this discussion.~~the results of operations.

The Company recorded a 19% effective tax rate ~~increased~~in 2022 compared to ~~45%~~a 20% effective tax rate in ~~2017 from 24% in 2016. This included the $18 million charge to write-down the net deferred tax assets as a result of~~2021. Including both the federal ~~income~~and state benefits, the 2022 effective tax ~~reform near year-end. Before this charge,~~rate benefited by 4.5% from tax exemptions on investment securities and other tax-advantaged investments. Including both the federal and state benefits, the effective tax rate ~~in 2017~~ was ~~26%.~~

~~The Company~~ also measures its effective tax rate on adjusted income as a non-GAAP measure. The Company excluded the $18 million deferred tax provisional write-down from its tax expense in this analysis. The adjusted effective tax rate on adjusted pre-tax income measured 29% in 2017. This adjusted rate exceeded the 26% GAAP rate before the deferred tax charge due to the total net adjustments to GAAP income, primarily from merger charges. These charges resulted in lower GAAP pre-tax income, compared to adjusted pre-tax income. As a result, the GAAP tax rate (before the deferred tax charge) had a higher proportionate benefit from tax advantaged revenues, and therefore was lower than the adjusted rate. This is a normal occurrence for the Company due to its record of acquisitions which result in merger costs that reduce GAAP earnings.

The 29% adjusted income tax rate on adjusted income in 2017 increased from 26% in 2016. This increase primarily reflects the increase in pre-tax adjusted income and the proportionately lower benefit of slower growing tax advantaged sources and a decrease in the benefit from investment tax credit programs. As the Company has grown, ongoing earnings growth has been a normal contributor to changes in the tax rate.

The 29% adjusted effective tax rate on adjusted income in 2017 was 6% lower than the 35% federal statutory rate due to the benefit of items listed in the effective tax rate table in the consolidated financial statements. Federal tax reform reduced the future federal statutory tax rate to 21%, and also adjusted certain other deductions and benefits that impact the overall effective tax rate. The Company estimates that federal tax reform results in a projected effective tax rate of 22-24%, taking into account anticipated changes in earnings and revenue/expense mix. As previously noted, the Company expects to record Commerce merger expenses in 2018 and therefore anticipates that GAAP income may be lower than adjusted income and the GAAP tax rate may be lower than the adjusted tax rate. The actual rates recognized will depend on business, market, and tax developments in 2018.

The Company’s report on Form 10-K in 2016 commented on potential tax reform, and the actual reform and its impacts were consistent with the Company’s analysis when this reform was under discussion at the start of the year.

The Company had accumulated a net deferred tax asset totaling $41 million at the start of the year. This tax asset was further increased due to the Commerce acquisition. This asset represented the benefit of future tax deductions resulting from differences between GAAP and tax accounting based on an assumption about future earnings levels. Because tax reform reduced the future statutory tax rate, the benefit of these future deductions was reduced, and necessitated a 28% write-down of the net tax asset at year-end. As noted in the consolidated financial statement, this asset was primarily composed of itemsby 3.4% related to the allowance for loan losses and purchase accounting adjustments, and was net of liabilities consisting primarily of intangible amortization. The $18 million net write-down was the result of the tax reform impacts on these and other component items of the net deferred tax asset. Many banks reported write-downs due to the accumulation of tax assets with similar components.

~~Table of Contents~~

~~The deferred tax asset at year-end 2017 includes a $7 million balance related to unrealized capital losses on~~Company’s tax credit ~~investments. The realization of these assets depends on the Company’s ability to generate future capital gains. The Company generated capital gain~~investment projects. These projects provided $0.03 per share in net income ~~from the sale of equity securities~~benefit in ~~2017 which will be available to significantly offset these losses when they are realized~~2022 and $0.02 per share in the future. The company expects to generate additional future capital gain income from a variety of sources, and has established a small $200 thousand state tax reserve on this component of the deferred tax asset.

The benefit to the overall effective rate from tax credit related investments decreased to 5% in 2017 from 8% in 2016 and 15% in 2015. The market benefit of these investments decreased in July 2016 based on updated IRS guidance, and investment supply was lower in 2017. Net2021, net of amortization charges recorded ~~as a component of~~to non-interest ~~income, these investments contributed $0.04 to EPS in 2017, compared to $0.07 in 2016 and $0.17 in 2015.~~income. The Company ~~anticipates that~~actively pursues tax credit investment projects to provide financial support to community development projects as part of its overall banking services while also generating an appropriate return on the ~~supply of~~Bank’s investment. In recent years these ~~investments may continue to decrease as the overall marginal corporate tax rate declines in the country.~~projects have included historic rehabilitation, low-income housing, new markets and renewable energy generation investments.

Total Comprehensive ~~Income.~~ Income: Total comprehensive income includes net income together with other comprehensive ~~income. Comprehensive~~ income, ~~totaled $50~~which primarily consists of unrealized gains/losses on debt securities available for sale, after tax. Total comprehensive income was a loss of $85 million in ~~2017~~2022 compared to ~~$72~~income of $85 million in 2021. The loss in 2022 results from the ~~prior year. This $22 million decrease was mainly~~unrealized bond losses in 2022 due to the ~~$19 million change~~rise in ~~other comprehensive income~~interest rates during the year.

Table of Contents

LIQUIDITY AND CASH FLOWS

Short-Term Liquidity:In 2022, loan growth was the primary use of cash, which was mainly sourced from short-term investments and investment securities. The ratio of cash and cash equivalents to ~~a loss~~total assets decreased to 6% from 14% over this period in accordance with the Company’s plan to invest excess liquidity into higher yielding loans. Investment securities and wholesale funding are ongoing potential sources of ~~$6 million~~cash to supplement deposit growth to support targeted loan growth.

At year-end 2022, the Bank had $2.1 billion in ~~2017 from income~~total borrowing availability with the FHLBB and the Federal Reserve Bank of ~~$13 million in 2016. The $6 million loss~~Boston. This availability is ~~due~~collateralized with investment securities and loans to the ~~realization~~extent utilized.

The Company continues to view itself as having sufficient liquidity with a high quality securities portfolio and well-positioned wholesale funding sources. The relative stability of deposit balances and costs was also viewed as positive in ~~net income~~2022 as an indicator of the prior unrealized equity securities gains which were partially offset by the prior unrealized loss on cash flow hedges. In 2016, other comprehensive income of $13 million resulted from the impact of lower long term interest rates, increasing the unrealized securities gain and decreasing the unrealized loss on derivative hedges.

~~Commerce Acquisition.~~ At the close of business on October 13, 2017, the Company completed the acquisition of Commerce Bancshares Corp. and the merger of Commerce Bank and Trust into Berkshire Bank. With this acquisition, Berkshire gained the leading deposit market share in Worcester, the second largest city in New England. This business combination was the catalyst for Berkshire’s corporate headquarters relocation to Boston and it filledcore funding in the Company’s ~~Massachusetts footprint west~~markets. The ratio of ~~Boston. This merger allowed Berkshire~~loans to strategically cross the $10 billion asset threshold with the goal of absorbing the additional regulatory burden with offsets from the accretive earnings benefits of the acquisition. The Commerce acquisition included deposit balances which supplemented Berkshire’s liquidity. At the time of the merger announcement, the Company also conducted a public stock offering which had the effect of offsetting the goodwill and costs of the merger when completed, as well as providing additional capital to support future growth including targeted expansion in Greater Boston.

~~The consideration for the Commerce acquisition was $229 million and deal costs were estimated~~deposits measured 81% at $20 million after-tax ($32 million pre-tax). The stock consideration included 4.842 million common shares valued at $188 million and 522 thousand preferred shares valued at $41 million, based on the $38.95 closing price of Berkshire common stock at the closing date. The preferred stock is non-voting and convertible under certain conditions into two common shares for each preferred share. It was issued to one shareholder interest, who also acquired common shares in the merger totaling 9.9% of total Berkshire common shares outstanding at the merger date.

~~The merger was announced in May and closed in October. Systems integration is targeted for March 2018.~~

Berkshire acquired net tangible assets with a fair value of $91 million as of the merger date, including a $35 million net deferred tax asset which was subsequently written down due to federal tax reform. The Company recorded $116 million in goodwill and $22 million in intangible assets, consisting primarily of the core deposit intangible asset.

The Company included $100 million of the equity from the common stock offering in its analysis of the Commerce acquisition. This analysis also assumed that the preferred stock would be converted to common stock and assumed that transaction costs were an initial adjustment to equity. The Company filed a Form 8-K/A with the SEC on December 29, 2017 which included a combined pro forma balance sheet, and purchase accounting adjustments in Note 2 of the Consolidated Financial Statements were not materially changed from this filing. Including the above stated assumptions, the pro forma total dilution to tangible book value per share related to the Commerce acquisition was estimated at less than 1%. The Company targeted a double digit return on equity for this acquisition based on its analysis. The actual acquisition cost was higher than original estimates due to a higher stock price on

~~Table of Contents~~

Berkshire shares at closing. The acquisition was analyzed based on the existing tax code, and the year-end federal tax reform is expected to benefit the future earnings stream targeted to payback the higher deal cost.

~~Pro Forma Acquisition Analysis.~~ Note 2 - Acquisitions of the Consolidated Financial Statements includes pro forma summary financial information assuming that the Commerce acquisition had been completed as of January 1, 2016. Pursuant to accounting principles, this pro forma financial information is based on the actual financial information of Berkshire and the acquired entity, and it includes purchase accounting adjustments but does not include targeted expense reductions or actual deal costs recorded.

The pro forma increase in revenue in 2016, the first year of acquisition, was $81 million, or 27%. The pro forma increase in net income available to common shareholders was $20 million, or 34%, while the pro forma increase in earnings per common share was $0.27, or 14%. This analysis did not include the $8 million, or 20%, in annual Commerce cost savings originally targeted on completion of integration. It also did not include the 3.03 million common shares representing the $100 million portion of the public stock offering that the Company analyzed in conjunction with the acquisition. These two factors were generally offsetting in their impact on pro forma earnings per share. This analysis did not include the future benefit of the year-end federal tax reform or revenue synergies from changes in balance sheet management that Berkshire began undertaking subsequent to the acquisition. It also did not project a lower provision for loan losses on Commerce operations due to the fair value accounting recorded on the merger date. The $0.27 pro forma EPS accretion did not include incremental operating cost and revenue impacts of crossing the Dodd Frank threshold. The pro forma analysis for 2017, the second year of acquisition, also indicated increases in revenue, earnings, and earnings per share.

~~Quarterly Results.~~ Quarterly results for 2017 and 2016 are presented in a note to the consolidated financial statements. Results for all of these periods have been discussed in previous SEC Forms 10-Q and 10-K, except for operations in the fourth quarter of 2017. The first quarter of 2017 was the first full quarter including the First Choice operations acquired in December 2016. Berkshire produced steady growth in earnings and earnings per share through the first nine months of the year, including the benefits from the integration of First Choice operations which were completed during this period. First quarter results included several items that were viewed as not related to ongoing operations including realized equity gains which largely offset charges for terminating hedging and premises contracts, as well as merger costs. Revenues in the second and third quarter included seasonally higher mortgage banking revenue. A loss was recorded in the fourth quarter due to the $18 million charge for the deferred tax asset write-down resulting from federal tax reform and related charges for investment in employees and community giving. The fourth quarter also had elevated merger costs due to the Commerce acquisition. The Company viewed all of the above fourth quarter items as not related to ongoing operations, and its measure of adjusted earnings per share was generally stable through the final three quarters of the year. Per share results were impacted by the common stock offering in May which was dilutive to per share earnings until these shares, as well as the shares issued for Commerce merger consideration, obtained the benefit of Commerce operations acquired in October.

~~Table of Contents~~

~~COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015~~

~~Summary:~~ Berkshire’s 2016 results included the 44 Business Capital operations acquired in April and the First Choice Bank operations acquired in December. Berkshire’s 2015 results included the Hampden operations acquired in April and the Firestone operations acquired in August. As a result, most measures of revenue, expense, income, and average balances increased in 2016period-end, compared to 2015 -- including the impact of acquired operations in both years. Additionally, per share measures were affected by the issuance of common shares as merger consideration. All acquisitions were targeted to be accretive to earnings and earnings per share when fully integrated, and to provide a long term double digit return on equity.

Results in 2016 continued the trend of improving profitability and further demonstrated a rebound from lower profitability in 2014. The GAAP return on assets increased by 9% to 74 basis points and the adjusted return on assets increased by 5% to 86 basis points. This was driven by the improvement in the efficiency ratio to 58.3% from 60.9%, which more than offset compression in the net interest margin and lower net tax credit benefits. The efficiency improvement resulted from positive operating leverage driven by revenue growth in conjunction with disciplined expense management. The improved return on assets contributed to higher return on equity. Internal capital generation was viewed as providing support for the dividend payout and organic business growth as well as contributing to improvement in capital metrics. In 2016, the return on equity measured 6.4% and the adjusted return on tangible equity measured 12.5%.

~~Total Net Revenue.~~ Total net revenue increased by $30 million, or 11% to $298 million in 2016, reaching $304 million annualized in the fourth quarter including the new First Choice operations. Revenue growth included a 9% increase in net interest income and a 19% increase in fee income. Fourth quarter fee income increased to 26% of total revenue including First Choice mortgage banking revenues. Total revenue per share increased by 2% to $9.57 for the year 2016.

~~Net Interest Income.~~ Annual net interest income increased by $18 million, or 9%, in 2016. This included the benefit of a 10% increase in average earnings asset from business expansion and was partially offset by a 1% decrease in the net interest margin to 3.31% from 3.34%. The decrease in margin during 2016 primarily reflected an increase in the cost of funds during the year to 0.73% in the final quarter of 2016 from 0.56% in the fourth quarter of 2015. This included the fixed rate interest rate swaps that became active in the first half of the year, the impact of higher short term interest rates on wholesale funding, the lengthening of time deposit maturities, and the higher cost of acquired First Choice deposits. The fourth quarter yield on earning assets was unchanged in 2016 compared to 2015. Loan yield compression was offset by higher securities yields and the benefit of the First Choice mortgage loans held for sale. The contribution of purchased loan accretion to net interest income was $8 million in both 2016 and 2015.

~~Non-Interest Income~~. Fee income increased by $11 million, or 19%, in 2016 and totaled $69 million. Loan related income grew by $8 million, or 101%, and mortgage banking income by $3 million, or 83%. These revenues benefited from the ongoing low interest rate environment through much of the year. Loan related income included SBA loan sale gains of $3 million, interest rate swap fee income of $5 million, and portfolio loan sale gains of $5 million. SBA loan sales increased due primarily to the contribution of the new 44 Business Capital team.

The increase in mortgage banking income was primarily due to the inclusion of First Choice mortgage banking operations in December. Deposit related fees were flat at $25 million and decreased to 0.43% of average deposit balances in 2016 compared to 0.49% in the prior year. Deposit fees in 2016 included $7 million in consumer overdraft income, $8 million in card related fees, and $10 million in service charges and other income.

Non-interest income in 2016 included a $1 million net gain on the sale of business operations. Berkshire recorded a charge of $3 million for all other non-interest income in 2016, compared to a charge of $5 million in the prior year. This was due to charges for the amortization of tax credit related investments, which were more than offset by benefits to income tax expense, as further discussed below. This amortization charge totaled $9 million in 2016 and $11 million in 2015. This charge was partly offset by income accrued on bank owned life insurance, which totaled $4 million both in 2016 and in 2015.

~~Table of Contents~~

~~Provision for Loan Losses.~~ The provision for loan losses totaled $17 million in both 2016 and 2015. The provision for loan losses exceeded net loan charge-offs in both years, and resulted in an increase in the allowance for loan losses related primarily to growth in the loan portfolio during the year.

~~Non-Interest Expense.~~ Total non-interest expense increased by $6 million, or 3%, in 2016. Excluding merger and restructuring costs, adjusted expenses increased by $8 million, or 5%. In comparison, total revenue increased by $30 million, or 11% and adjusted revenue increased by $32 million, or 12%. The resulting positive operating leverage improved the efficiency ratio to 58.3% in 2016 from 60.9% in 2015. This in turn led to the increases in return on assets and return on equity previously discussed. Expense growth in 2016 was mostly in the primary operating expense components of compensation, and technology due to the acquisitions and growth in business activities. Full time equivalent staff increased by 510 positions to 1,731 positions at year-end 2016 from 1,22168% at the start of the year. ~~Staff growth included 505 positions which were added with the First Choice acquisition~~A number of metrics are utilized in ~~December.~~

~~Expense results also include merger~~establishing optimal and ~~restructuring costs which~~minimal liquidity targets and the Company ~~excludes~~is generally well positioned across these metrics.

In the environment prevailing at the end of 2022, some banks have reported deposit outflows as funds are withdrawn to reinvest in other higher yielding financial instruments, and also as excess pandemic related liquidity from ~~its measure~~federal support programs is spent down. The rising rate environment potentially constrains industry deposit demand growth. Additionally, the rising rates have contributed to the extension of ~~adjusted earnings.~~the investment portfolio average life and the unrealized bond losses are a potential constraint on some options for the use of investments to support overall liquidity. The unrealized losses would affect regulatory capital if they were realized through the sale of the related securities, which could then impact the management of capital. The excess liquidity which has been widespread throughout the financial system during the pandemic may constrain funding sources if system wide liquidity is reduced. The Company ~~views merger related costs~~is monitoring various scenarios as ~~part~~it continues to pursue organic growth and market share gains in the context of its BEST strategic plan.

The Company maintains a contingency funding plan based on its assessment of the ~~economic~~liquidity stress environment. Primary liquidity data is reported on daily, and thirty-day stress analytics are maintained on an updated basis. A one year forward liquidity stress test evaluates stress across a variety of stress scenarios, including severe adverse loan loss scenarios. The Company has defined strategic options which allow it to materially meet funding needs in all stress scenarios.

Long-Term Liquidity:Over the long term, the Company targets to generate organic deposit growth that will fund organic loan growth. Operating earnings are expected to fund routine cash operating costs, shareholder distributions, and capital expenditures. As a depository institution, the Bank maintains a high-quality securities portfolio as a source of liquidity to service unexpected customer demand for loan advances or deposit withdrawals. The Company and Bank have investment grade debt ratings from Moody’s Investors Services and the KBRA bond rating firm. The Company also is active in ~~acquired businesses. Merger related costs totaled $14 million~~secondary markets for residential mortgages and SBA guaranteed loans, which support its organic growth without relying on internal liquidity and capital resources. The Company is monitoring for potential shifts in ~~2016, including $12 million related~~deposit sources as customer usage of traditional banking channels is also impacted by the spread of fintech alternatives. The Company’s strategy is to ~~the First Choice acquisition. Merger related costs totaled $13 million in 2015, including $11 million related~~actively partner with fintechs to the Hampden acquisition. Merger related costs primarily consist of severance costs, contract termination charges, professional fees, and variable compensation costs. Restructuring costs have included the write-off of uneconomic contracted costs, as well as restructuring costs to optimize the branch network in light of market changes for branch services based on the emergence of mobile banking as well as changes in customer access patterns. Restructuring and other expense totaled $2 million in 2016 and $4 million in 2015.

~~Income Tax Expense~~. ~~The effective income tax rate increased to 24% in 2016 from 9% in 2015. This 15% increase~~pursue a strong position in the ~~tax rate included 7% less benefit from tax credits, 4%~~evolving financial marketplace, while evolving its own technology to support these partnerships. The Company is also monitoring potential shifts in deposit demand as it is being impacted by higher ~~state income tax net~~interest rates and inflation, and potentials impacts of an economic slowdown and ~~4% all other changes, which primarily were due to the higher pretax income in 2016.~~lower customer liquidity.

The benefit to the overall effective rate from tax credit related investments decreased to 8% in 2016 from 15% in the prior year. In July, 2016 the IRS provided updated guidance that reduced the benefits of certain entity structures related primarily to commercial historic rehabilitation projects. For 2016, the Company netted $0.07 in benefit to earnings per share from these programs, as compared to $0.17 per share in 2015 (net of amortization charges recorded in non-interest income).

The impact on the overall effective rate from net state income taxes was 2% in 2016 compared to (2%) in 2015. Normally state income taxes increase the overall effective income tax rate. The impact in 2015 was a decrease due to the mix of items affecting New York state taxes; this is not expected to reoccur. The increase in the overall effective tax rate due to higher pretax income reflected the lower proportionate benefit from tax-exempt securities and bank owned life insurance income. These benefits increased by only 10% in 2016, compared to the 42% increase in total pretax income.

Table of Contents

~~LIQUIDITY AND CASH FLOWS~~

~~Liquidity is~~Parent Company Liquidity: Total cash held by the ~~ability~~holding company was $90 million at year-end 2022. The Company targets to ~~meet~~use cash ~~needs at all times with available cash and established external liquidity sources or by conversion of other assets to cash at a reasonable price and in a timely manner. Berkshire evaluates liquidity~~ at the holding company ~~and on a consolidated basis, which is primarily a function of the Bank’s liquidity.~~

The primary liquidity need at the holding company is to support its capital structure, including shareholder dividends and debt service. Additionally, the holding company uses cash to support certain organizational expenses, stock purchases and buybacks, merger related costs, and limited business functions that cannot be performed at the Bank or the insurance subsidiary. The holding company primarily relies ontogether with dividends from the Bank to ~~meet its ongoing~~fund holding company cash ~~needs.~~uses including modest operating expenditures, debt service, purchases of investments, shareholder dividends, and stock repurchases. The holding company generally expects to maintain cash on hand equivalent to normal cash uses, including common stock dividends, for at least a one year period. Sources and uses of cash at the parent are reported in the condensed statements of the parent company included in the notes to the Consolidated Financial Statements. There are certain restrictions on the payment of dividends by the Bank as discussed in Note 18 - Shareholders' Equity and Earnings Per Common Share of the Consolidated Financial Statements. As of year-end 2017, the state statutory limit on future dividend payments by the Bank totaled $53 million. This amount is based on retained earnings of the Bank and is expected to be supplemented by future bank earnings in accordance with the statutory formula. Dividends by the holding company require notice and non-objection from the Federal Reserve Bank in the event that earnings are not sufficient to cover the dividend. There was no objection to the dividend declared on fourth quarter operations which resulted in a loss due to the charge recorded due to federal tax reform.

At year-end 2017, the holding company had $83 million in cash and equivalents, compared to $43 million at the start of the year. The Parent’s cash is held on deposit in the Bank. The Parent raised $153 million in a public stock offering in May and invested $100 million into the Bank in conjunction with the Commerce acquisition in October, with the remaining cash supplementing regular liquidity held at the Parent. The Bank paid $39 million in dividends to the holding company ~~in 2017, which was an increase from $33 million in 2016.~~presently require approval by the FDIC and the Massachusetts Division of Banks. The holding ~~company has a $5 million unsecured line of~~company’s goal is to maintain access to private and public credit which was unused at year-end 2017 and which was reduced from $15 million during the year after the stock raise. The holding company manages a portfolio of equity securities in support of the consolidated strategy for investments and asset liability management. In 2017, the Company acquired Commerce, and all merger consideration was stock, so there was no impact on holding company liquidity, and the Commerce parent had no significant liquidity. Most merger and integration related costs are being incurred at the Bank level.

The Bank’s primary ongoing source of liquidity is customer deposits and the main use of liquidity is the funding of loans and lending commitments. Additional routine sources are borrowings, repayments of loans and investment securities, and the sale of investment securities. The Bank targetsmarkets to ~~grow customer deposits by increasing its market share among its regions in order~~provide access to sustain loan growth as a primary component of its strategy. Deposit strategies also consider relative deposit costs as well as relationship and market share objectives. The Bank’s acquisition strategy is also targeted to supplement business activities including bank acquisitions and acquisitions of branches. The Commerce acquisition provided additional liquidity as demonstrated by a decrease in Berkshire’s loans/deposits ratio to 95% at year-end 2017 from a quarter-end high of 102% during the year. The First Choice acquisition in December 2016 also improved liquidity at year-end 2016 compared to earlier levels during that year. Additionally, the Bank utilizes wholesale funding sources including borrowings and brokered time deposits. Around year-end 2017, the Bank recruited government banking and international banking professionals who will be pursuing opportunities to develop municipal, institutional, and commercial deposit sources in the future.

~~The Company monitors the loans/deposits ratio in assessing directional changes in its liquidity, and in the past has allowed this metric to reach levels near 110%~~ depending on the timing of business activity. The Company also monitors the levels of its wholesale funding in relationship to total assets. Brokered deposits can be more volatile than customer deposits depending on Company and economic events. FHLBB borrowings are in the context of standard, long-term FHLB programs but overall availability is constrained by collateral tests.conditions.

The Company also monitors the liquidity of investment securities and portfolio loans and has increased its active management of the loan portfolio to accomplish Company objectives, including liquidity goals. The Bank relies on its borrowings availability with the FHLBB for routine operating liquidity, and has other overnight borrowing relationships for contingency liquidity purposes. The Bank has improved its collateral management to improve its

~~Table of Contents~~

credit availability with the FHLBB and the Federal Reserve Bank of Boston. The Bank has also expanded its interest rate swaps with national counterparties to provide fixed interest instruments to large commercial borrowers. The Company has strengthened its liquidity planning and management processes in conjunction with its overall growth and regulatory expectations.

In 2017, the Bank’s primary use of funds was loan growth and the primary source of funds was deposit growth. The Bank’s balance sheet management in 2017 included the integration of the $1.8 billion Commerce balance sheet, which resulted in changes in certain asset management and funding strategies compared to the history of those operations. The Bank’s total FHLBB unused borrowing availability was $1.11 billion at year-end 2017 compared to $559 million at year-end 2016. The Bank is also expanding its list of approved correspondent banks and the availability of federal funds lines to the Company, although there has been no regular use of those lines historically or contemplated.

In acquiring Commerce, the Bank acquired their payroll deposit and transfer service, which works with payroll service bureau clients to accept their deposits and process ACH payments to their commercial customer employee accounts. The balances in this business fluctuate daily based on payroll cycles. As a result, the Bank’s daily cash management has expanded and it maintains additional focus on overnight liquidity and the management of daily cash clearing activity. During the fourth quarter, these payroll deposits averaged $242 million, with a high of $620 million and a low of $81 million.

The Bank utilizes the mortgage secondary market as a source of funds for residential mortgages which are sold into that market. Secondary market counterparties include federal mortgage agencies and selected U.S. financial institutions. The Bank works with third parties in hedging interest rate locks with to-be-announced mortgage backed securities and arranging commitments for the sale of individual loans to approved secondary market investors. Most sales are on a servicing released basis. Mortgage loans originated for sale in 2017 totaled $2.4 billion.

Berkshire has additionally developed financial institution banking relationships in and around its regions for the wholesale purchase and sale of seasoned loans. Berkshire’s financial institution banking has also expanded wholesale transactions of commercial loans, including purchases and sales of whole loans and participations in syndicated loan transactions.

The greatest sources of uncertainty affecting liquidity are deposit withdrawals and usage of loan commitments, which are influenced by interest rates, economic conditions, and competition. Due to the unusual and prolonged low interest rate environment, there is uncertainty about the behavior of deposits if interest rates increase at some future time as is anticipated. The Company believes that its market positioning and relationship focus will generally enhance the stability of its deposits, and it also models various scenarios for the purpose of contingency liquidity planning. The Bank manages the concentration of deposits from customers and in various regions and product types. The Bank relies on competitive rates, customer service, and long-standing relationships with customers to manage deposit and loan liquidity. Based on its historical experience, management believes that it has adequately provided for deposit and loan liquidity needs. Both liquidity and capital resources are managed according to policies approved by the Board of Directors and executive management and the Board reviews liquidity metrics and contingency plans on a regular basis. The Bank actively manages all aspects of its balance sheet to achieve its objectives for earnings, liquidity, asset quality, interest rate risk, and capital.

~~Table of Contents~~

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.

The Company’s BEST plan includes the optimization of capital, including reducing excess capital through organic growth and capital returns to shareholders. The operation of this plan was evidenced in 2022 by loan growth and shareholder distributions, including a 50% increase in the shareholder dividend in the final quarter of the year. Capital optimization was also supported through the subordinated debt issuance, reducing the coupon compared to the existing debt which was later prepaid. In conjunction with this issuance, the Company received an inaugural investment grade bond rating from Moody’s and executed a landmark Sustainability Bond placement which expands capital market access for socially responsible investments.

The Company views its regulatory capital measures as providing it with an ample cushion of excess capital in relation to its operating condition, risk profile, and strategic plans, and compared to peers. The Company’s priorities for uses of its capital are based on maintaining strong capital, supporting organic growth and its BEST strategic plan, paying a dividend yield that in the long run is competitive and targets a 30-40% payout ratio, and distributing excess capital to shareholders through stock repurchases, with a goal of achieving an efficient level and composition of capital.

The Company repurchased approximately 5% of its shares in 2021 and an additional 9% in 2022. After year-end 2022, the Company announced a 2023 share repurchase program for approximately 4% of its outstanding shares. In large measure, these repurchases represented a return of capital that became excess as a result of the reduction of certain business activities and loans, including targeted runoff of selected portfolios.

The unrealized available for sale securities losses reduce the book value of equity. These losses are expected to accrete back into equity as the securities season to maturity. These losses are not deducted from regulatory capital which is the primary focus of the Company’s capital management. The measure of tangible book value is a focus of bank investors, together with the ratio of tangible equity to tangible assets and the ~~Bank target~~measure of tangible book value per share. The non-GAAP measure of tangible equity to ~~maintain sufficient capital~~tangible assets decreased to ~~qualify~~8.0% from 10.0% during 2022, and tangible book value per share decreased by 12% to $20.95 from $23.69. The Company is monitoring its tangible book value related metrics and it believes that its condition at period-end was within a general range for ~~the “Well Capitalized” designation by federal regulators. Berkshire’s long term~~peers at that date.

The Company’s long-term goal is to ~~use~~maintain an efficient capital ~~efficiently~~structure and to ~~achieve its objective to become~~provide a ~~higher performance company with a targeted~~ return ~~on equity exceeding 10%. A double digit return on equity is used to benchmark all lending and investment programs, together with all acquisition analyses. The Company seeks to maintain a competitive~~in excess of the cost of its common equity capital. The Company’s tier 2 capital ~~and capital structure. The Company generally targets to maintain~~includes a ~~ratio of tangible equity/tangible assets in the range of 7-8%. This ratio increased in 2017 due primarily to the benefit of the common stock offerings.~~

Berkshire views its internal return on tangible capital as the primary capital resource of the Company. The return on tangible equity averaged over 12% for the three years 2015-2017. The Company focuses on internal capital generation to support shareholder dividends and targeted organic growth and also to support non-operating charges and/or improvement in its capital ratios.$100 million subordinated note. The Company maintains a universal shelf registration ofstatement for capital securities with the SEC. The ~~shelf was used~~Company and Bank are investment grade rated by Moody's Investors Service and by the KBRA bond rating service. The Company’s stock is traded on the New York Stock Exchange and the Company views itself as having good access to ~~support the $153 million public offering of common stock in May 2017.~~ current capital markets.

The Company ~~sometimes uses issuances of unregistered stock~~performs capital stress testing at least annually and has a goal to remain qualifying for ~~targeted small contractual payments.~~the “well capitalized” designation in the severely stressed scenario. The Company ~~has an approved stock repurchase program for 500,000 shares. There have been no recent repurchases under this program~~views its current stressed capital position as sound and ~~no specific repurchases are presently contemplated. The Company normally uses common stock~~conforming to its objectives.

In acting as a ~~significant component consideration~~source of strength for ~~business combinations. The resulting stock issuances have meaningfully increased~~ the ~~float~~Bank, the Company relies on capital distributions from the Bank in order to provide operating and ~~market capitalization of~~capital service for the Company, which ~~exceeded $1.5 billion for the first time~~ in ~~2017.~~

~~Due~~turn can access national financial markets to provide financial support to the ~~stock issuances in 2017,~~Bank. Capital distributions from the Bank to the parent company presently require approval by the FDIC and the Massachusetts Division of Banking. Increased distributions from the Company ~~has utilized most of its authorized common~~to shareholders require notice to and ~~preferred shares. Shareholder approval~~nonobjection from the Federal Reserve Bank. In 2022, the Bank paid $108 million in dividends to ~~amend~~ the Certificate of Incorporation is required to increase authorized shares. The Company is assessing potential future actions to increase its authorized shares to support its potential future strategic growth.

The Company regularly evaluates the markets for capital instruments and views itself as well positioned to access additional capital in various ways if appropriate based on future changes in conditions. Additional discussion of the Company’s capital management is contained in the Shareholders’ Equity section of the discussion of Changes in Financial Condition in this report.

~~AVERAGE BALANCES, INTEREST, AVERAGE YIELDS/COST AND RATE/VOLUME ANALYSIS~~

~~Tables with the above information are presented in Item 6 of this report.~~

parent company.

Table of Contents

~~CONTRACTUAL OBLIGATIONS~~

~~The year-end 2017 contractual obligations were as follows:~~

~~Item 7-7A - Table 1 - Contractual Obligations~~

(In thousands) Total
Less than One
Year

One to Three
Years

Three to Five
Years

After Five
Years
FHLBB borrowings (1) $ 1,047,736
$ 836,115
$ 204,183
$ 7,438
$ —
Subordinated notes 89,339
—
—
—
89,339
Operating lease obligations (2) 96,356
12,830
20,080
15,859
47,587
Purchase obligations (3) 102,002
16,321
31,086
27,507
27,088
Total Contractual Obligations $ 1,335,433
$ 865,266
$ 255,349
$ 50,804
$ 164,014

~~Acquisition related obligations are not included.~~

~~(1) Consists of borrowings from the Federal Home Loan Bank. The maturities extend through 2027 and the rates vary by borrowing.~~

~~(2) Consists of leases, bank branches, and ATMs through 2039.~~

~~(3) Consists of obligations with multiple vendors to purchase a broad range of services.~~

Further information about borrowings and lease obligations is disclosed in Note 12 - Borrowed Funds and Note 17 - Other Commitments, Contingencies, and Off-Balance Sheet Activities of the Consolidated Financial Statements.

~~OFF-BALANCE SHEET ARRANGEMENTS~~

In the normal course of operations, Berkshire engages in a variety of financial transactions that, in accordance with generally accepted accounting principles are not recorded in the Company’s financial statements. The Company views these transactions as ordinary to its business activities and its assessment is that there are no material changes in these arrangements at year-end 2017 compared to year-end 2016. Contractual obligations totaled $1.3 billion at year-end 2017, compared to $1.5 billion at year-end 2016. This decrease was primarily due to the lower balance of FHLBB borrowings at year-end 2017. As previously reported in the discussion of changes in financial condition, Berkshire has outstanding derivative financial instruments and engages in hedging activities, and the fair value of these contracts is recorded on the balance sheet.

~~FAIR VALUE MEASUREMENTS~~

The most significant fair value measurements recorded by the Company are those related to assets and liabilities acquired in business combinations. These measurements are discussed further in the mergers and acquisitions note to the financial statements. The premium or discount value of acquired loans has historically been the most significant element of this presentation.

Berkshire provides a summary of estimated fair values of financial instruments at each period-end. The premium or discount value of loans has historically been the most significant element of this presentation. This discount is a Level 3 estimate and reflects management’s subjective judgments. At year-end 2017, the premium value of the loan portfolio was $175 million, or 2.1% of carrying value, compared to $27 million, or 0.4% of carrying value at year-end 2016. This increase included the impact of tighter lending spreads at year-end 2017 reflecting competitive factors, along with ongoing improvements in overall asset quality.

The Company makes further measurements of fair value of certain assets and liabilities, as described in the related note in the financial statements. The most significant measurements of recurring fair values of financial instruments primarily relate to securities available for sale and derivative instruments. These measurements were included in the previous discussion of changes in financial condition, and were generally based on Level 2 market based inputs. Non-recurring fair value measurements primarily relate to impaired loans, capitalized mortgage servicing rights, and other real estate owned. When measurement is required, these measures are generally based on Level 3 inputs.

Financial instruments comprise the majority of the Company assets and liabilities. The net combined fair value of those instruments contributes to the economic value of the Company’s equity. The net premium value of financial instruments increased in 2017, reflecting the benefit of the common stock offering plus the contribution of retained

~~Table of Contents~~

earnings, together with the growth in the premium value of loans as discussed above. Instruments acquired in business combinations were recorded at fair value at acquisition date. These measures do not take into account the non-interest income generated by these customer relationships or the long term intangible value of the Company’s franchise in its markets.

~~IMPACT OF INFLATION AND CHANGING PRICES~~

The financial statements and related financial data presented in this Form 10-K have been prepared in conformity with accounting principles generally accepted in the United States of America, which require the measurement of financial position and operating results in terms of historical dollars, without considering changes in the relative purchasing power of money over time due to inflation. Unlike many industrial companies, substantially all of the assets and liabilities of the Bank are monetary in nature. As a result, interest rates have a more significant impact on the Bank’s performance than the general level of inflation. Interest rates may be affected by inflation, but the direction and magnitude of the impact may vary. A sudden change in inflation (or expectations about inflation), with a related change in interest rates, would have a significant impact on our operations.

~~IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS~~

Please refer to the notes on Recently Adopted Accounting Principles and Future Application of Accounting Pronouncements in Note 1 - Summary of Significant Accounting Policies of the Consolidated Financial Statements.

~~Table of Contents~~

APPLICATION OF CRITICAL ACCOUNTING POLICIES ~~AND ACCOUNTING ESTIMATES~~

The Company’s significant accounting policies and modifications to significant accounting policies made during the year are described in Note 1 ~~- Summary of Significant Accounting Policies~~to the financial statements. The preparation of the ~~Consolidated Financial Statements. Please see those policies~~financial statements is in ~~conjunction~~accordance with ~~this discussion. The accounting~~GAAP and ~~reporting policies followed by the Company conform, in all material respects, to accounting principles generally accepted in the United States and to~~ general practices ~~within~~applicable to the financial services industry. ~~The~~This preparation ~~of financial statements in conformity with accounting principles generally accepted in the United States~~ requires management to make estimates, assumptions, and ~~assumptions~~judgements that affect the amounts reported in the financial statements and accompanying notes. ~~While the Company bases estimates on~~The judgment and assumptions made are based upon historical experience, ~~current information and~~future forecasts, or other factors ~~deemed~~that management believes to be ~~relevant, actual~~reasonable under the circumstances. Actual results could differ from those ~~estimates.~~estimates, assumptions, and judgements.

~~The SEC defines “critical~~Not all significant accounting ~~policies” as those that~~policies require ~~application of management’s most~~management to make difficult, subjective or complex judgments. Certain estimates inherently have a greater reliance on the use of assumptions and judgments ~~often~~and, as such, have a greater possibility of producing results that could be materially different than originally reported. The following significant accounting 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 most critical accounting policies were significant in determining income and financial condition based on events in 2022.

Allowance for Credit Losses for Loans

The allowance for credit losses for loans (“ACLL”) represents management’s estimate of expected credit losses over the expected contractual life of our loan portfolio. Determining the appropriateness of the ACLL is complex and requires judgment by management about the effect of matters that are inherently ~~uncertain~~uncertain. Subsequent evaluations of the then-existing loan portfolio, in light of the factors then prevailing, may result in significant changes in the ACLL in those future periods.

The appropriateness of the ACLL could change significantly because current economic conditions and forecasts can change and future events are inherently difficult to predict. It is difficult to estimate how potential changes in any one economic factor or input might affect the overall allowance because a wide variety of factors and inputs are considered in estimating the allowance and changes in those factors and inputs considered may not occur at the same rate and may ~~change~~not be consistent across all product types. Additionally, changes in ~~future periods. Please see those policies in conjunction with this discussion. Management believes that the following policies would be considered critical under the SEC’s definition:~~

~~Allowance for Loan Losses.~~ ~~The allowance for loan losses represents probable credit losses that are inherent in the loan portfolio at the financial statement date~~factors and ~~which~~inputs may be ~~estimated. Management uses historical information, as well as current economic data, to assess~~directionally inconsistent, such that improvement in one factor may offset deterioration in others. One of the ~~adequacy of~~most significant judgments used in determining the allowance for ~~loan~~credit losses ~~as it~~ is ~~affected~~the macroeconomic forecast provided by ~~changing economic conditions and various external factors, which may~~a third party. Changes in the macroeconomic forecast, especially for the national unemployment rate, could significantly impact the ~~portfolio in ways currently unforeseen. Although~~calculated estimated credit losses.

While management ~~believes that it uses appropriate~~utilizes its best judgment and information available, ~~information to establish~~ the ~~allowance for loan losses, future additions to~~ultimate adequacy of our ACLL is dependent upon a variety of factors beyond our control, including the ~~allowance may be necessary if certain future events occur that cause actual results to differ from~~performance of our portfolios, the ~~assumptions used in making the evaluation. Conditions in the local~~ economy, and ~~real estate values could require the Company to increase provisions for loan losses, which would negatively impact earnings.~~

~~Acquired Loans.~~ ~~Loans that the Company acquired~~changes in business combinations are initially recorded at fair value with no carryover of the related allowance for credit losses. Determining the fair value of the loans involves estimating the amount and timing of principal and interest ~~cash flows initially expected to be collected~~rates. For detailed information on the ~~loans~~ACLL see Note 1- Summary of Significant Accounting Policies and ~~discounting those cash flows at an appropriate market rate of interest. Going forward, the Company continues to evaluate reasonableness of expectations~~Note 6 – Loans and Allowance for the timing and the amount of cash to be collected. Subsequent decreases in expected cash flows may result in changes in the amortization or accretion of fair market value adjustments, and in some cases may result in the loan being considered impaired. For collateral dependent loans with deteriorated credit quality, the Company estimates the fair value of the underlying collateral of the loans. These values are discounted using market derived rates of return, with consideration given to the period of time and costs associated with the foreclosure and disposition of the collateral.Credit Losses.

~~Income Taxes.~~ Significant management judgment is required in determining income tax expense and deferred tax assets and liabilities. The Company uses the asset and liability method of accounting for income taxes in which deferred tax assets and liabilities are established for the temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities. The realization of the net deferred tax asset generally depends upon future levels of taxable ordinary income, taxable capital gain income, and the existence of prior years' taxable income, to which "carry back" refund claims could be made. A valuation allowance is maintained for deferred tax assets that management estimates are more likely than not to be unrealizable based on available evidence at the time the estimate is made. In determining the valuation allowance, the Company uses historical and forecasted future operating results, including a review of the eligible carry-forward periods, tax planning opportunities and other relevant considerations. In particular, income tax benefits and deferred tax assets generated from tax-advantaged commercial development projects are based on management's assessment and interpretation of applicable tax law as it currently stands. These underlying assumptions can change from period to period. For example, tax law changes or variances in projected taxable ordinary income or taxable capital gain income could result in a change in the deferred tax asset or the valuation allowance. Should actual factors and conditions differ materially from those considered by management, the actual realization of the net deferred tax asset could differ materially from the amounts recorded in the financial statements. If the Company is not able to realize all or part of its net deferred tax asset in the future, an adjustment to the deferred tax asset in excess of the valuation allowance would be charged to income tax expense in the period such determination is made.

~~Table of Contents~~

~~Goodwill and Identifiable Intangible Assets.~~ Goodwill and identifiable intangible assets are recorded as a result of business acquisitions and combinations. These assets are evaluated for impairment annually or whenever events or changes in circumstances indicate the carrying value of these assets may not be recoverable. When these assets are evaluated for impairment, if the carrying amount exceeds fair value, an impairment charge is recorded to income. The fair value is based on observable market prices, when practicable. Other valuation techniques may be used when market prices are unavailable, including estimated discounted cash flows and analysis of market pricing multiples. These types of analyses contain uncertainties because they require management to make assumptions and to apply judgment to estimate industry economic factors and the profitability of future business strategies. In the event of future changes in fair value, the Company may be exposed to an impairment charge that could be material.

~~Determination of Other-Than-Temporary Impairment of Securities.~~ The Company evaluates debt and equity securities within the Company's available for sale and held to maturity portfolios for other-than-temporary impairment ("OTTI"), at least quarterly. If the fair value of a debt security is below the amortized cost basis of the security, OTTI is required to be recognized if any of the following are met: (1) the Company intends to sell the security; (2) it is "more likely than not" that the Company will be required to sell the security before recovery of its amortized cost basis; or (3) for debt securities, the present value of expected cash flows is not sufficient to recover the entire amortized cost basis. For all impaired debt securities that the Company intends to sell, or more likely than not will be required to sell, the full amount of the loss is recognized as OTTI through earnings. Credit-related OTTI for all other impaired debt securities is recognized through earnings. Noncredit related OTTI for such debt securities is recognized in other comprehensive income, net of applicable taxes. In evaluating its marketable equity securities portfolios for OTTI, the Company considers its intent and ability to hold an equity security to recovery of its cost basis in addition to various other factors, including the length of time and the extent to which the fair value has been less than cost and the financial condition and near term prospects of the issuer. Any OTTI on marketable equity securities is recognized immediately through earnings. Should actual factors and conditions differ materially from those expected by management, the actual realization of gains or losses on investment securities could differ materially from the amounts recorded in the financial statements.

Fair Value ~~of Financial Instruments.~~Measurements

The Company uses fair value measurements to determine fair value disclosures and to record fair value adjustments to certain ~~financial instruments~~assets and ~~to determine fair value disclosures. Trading assets,~~liabilities, such as interest rate swaps, impaired loans, securities available for sale, and ~~derivative instruments~~derivatives. Our fair values are ~~recorded~~based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at ~~fair value on a recurring basis.~~the measurement date. Additionally, from time to time, the Company may be required to record certain assets at fair value ~~other assets~~ on a ~~nonrecurring~~non-recurring basis, ~~or to establish a loss allowance or write-down based on the~~such as certain impaired loans held for investment and capitalized servicing rights. These non-recurring fair value adjustments typically involve write-downs of ~~impaired assets. Further,~~individual assets due to application of lower-of-cost or market accounting or other accounting standards.

Management has established and documented a process for determining fair value. The use of observable inputs is maximized and the ~~notes to financial statements include information about the extent to which~~use of unobservable inputs is minimized when developing fair value measurements. Whenever there is ~~used to measure assets~~no readily available market data, management uses its best estimate and ~~liabilities, the valuation methodologies used and its impact to earnings. For financial instruments not recorded at~~assumptions in determining fair value, but these estimates involve inherent uncertainties and the ~~notes to financial statements disclose the estimate~~application of ~~their fair value. Due to the judgments and uncertainties involved in the estimation process, the estimates~~management’s judgment. As a result, if other assumptions had been used, our recorded earnings or disclosures could ~~result in~~have been materially different ~~results under different assumptions~~from those reflected in these financial statements. For detailed information on our use of fair value measurements and ~~conditions.~~

our

Table of Contents

related valuation methodologies, see Note 1 – Summary of Significant Accounting Policies and Note 21 – Fair Value Measurements for more information.

Table of Contents

ENTERPRISE RISK MANAGEMENT

Other sections of this report on Form 10-K include discussion of market risk and risk factors. Risk management is overseen by the Company’s Chief Risk Officer, who reports directly to the CEO. This position oversees risk management policy, credit, compliance, and information security. Enterprise risk assessments are brought to the Company’s Enterprise Risk Management Committee, and then are reported to the Board’s Risk Management, Capital & Compliance Committee.

The Company includes recessionary/inflationary risk overlays on all of the material business risks to capture the uncertainties of the economic environment. The Company has also developed recession toolkits and playbooks that outline mitigating factors and actions that strive to minimize losses under such scenarios. Both of these items are addressed throughout the assessments and dashboards provided to the above Committees.

The high level corporate risk assessment focuses on the following material business risks: credit risk, interest rate risk, price risk, liquidity risk, operational risk, compliance risk, strategic risk, and reputation risk, with the credit risk category having the highest weighting. For all material business risks, residual risk was viewed as medium/low to medium due to mitigating controls functioning in the Company. In 2022, price risk increased in relation to the corporate appetite due to the impact of higher interest rates on the behavior and value of various interest sensitive instruments and operations. Residual price risk was viewed as medium including the impact of mitigating factors and management actions in the risk management environment.

LIBOR TRANSITION

The Company’s use of LIBOR based instruments and the industry-wide transition program away from LIBOR are discussed in Item 1 (“Business”) and Item 1-A (“Risk Factors”) of this report. The Company has in excess of $5 billion in notional balances of LIBOR based instruments related primarily to its commercial banking operations. These include loans index on LIBOR, as well as interest rate swap contracts including customer, dealer, and risk participation agreements.

The Financial Conduct Authority (“FCA”) presently intends to continue publishing most LIBOR indices through June 2023 for use with legacy instruments contracted in 2021 or before. The Company continues to execute plans to transition instruments associated with LIBOR to alternative reference rates. The Company has approved the use of Term SOFR as the lead base case index to replace LIBOR for pricing of new contracts starting in 2022, with Daily Simple SOFR as an alternate. The Company continues to monitor market adoption of alternate index rates as information becomes available or as requested by customers or other counterparties.

As of December 31, 2022, the Company had approximately $1.9 billion in LIBOR based commercial loans, including $1.8 billion maturing after the LIBOR cessation date at midyear 2023. The Company is focused on converting the majority of these loans to one month term SOFR, working with customers, counsel, and its core loan servicing provider. The Company had converted $333 million in outstanding loans through year-end 2022.

ENVIRONMENTAL, SOCIAL, GOVERNANCE (ESG) & COMMITMENT TO SOCIAL RESPONSIBILITY

BERKSHIRE’S APPROACH

Since its founding in 1846, Berkshire continues to be a purpose-driven, values-guided, community-centered bank working to achieve its vision of becoming a high-performing leading socially responsible community bank. Berkshire empowers the financial potential of its stakeholders by making banking available where, when, and how it's needed through an uncompromising focus on exceptional customer service, digital banking, and positive community impact. It provides a wide range of accessible, affordable, safe, responsible and sustainable financial solutions through its consumer banking, commercial banking and wealth management divisions.

Berkshire believes where you bank matters, and that simple decision can have an outsized impact on your community. That’s why ESG factors are central to the company’s vision, mission, business practices, and Berkshire’s Exciting Strategic Transformation (BEST). This better approach to banking with ESG at its core helps manage risk and unlock new business opportunities to create an ecosystem of positive impact and value, which in turn drives Berkshire’s commercial performance, creating capacity to invest more in its business, employees, customers, shareholders and communities.

Table of Contents

BEST COMMUNITY COMEBACK

Berkshire launched the BEST Community Comeback in late 2021, a transformational commitment to empower its stakeholders’ financial potential. The plan focuses on four areas critical to the long-term vibrancy and success of its communities: fueling small businesses; community financing and philanthropy; financial access and empowerment; and funding environmental sustainability. Through this far-reaching initiative, Berkshire aims to help create more businesses and jobs, help more families achieve the dream of owning a home, and aid communities in becoming more environmentally efficient and eco-friendly. Berkshire has made steady progress towards achieving its goal of deploying $5 billion to support its communities by the end of 2024. As of year-end, Berkshire has deployed more than $1 billion in low-moderate income neighborhoods, over $300 million to support low-carbon projects and has transitioned its own electricity supply to 99% renewable since launching the program.

CENTER FOR WOMEN, WELLNESS & WEALTH

Berkshire launched the Center for Women, Wellness, and Wealth (CWWW) to provide women with tools to help create a future enriched with financial stability and wellness. The Center, through partnerships with community organizations, specialized experts and thought leaders, offers events on wellness and financial planning, philanthropic coaching and development support, and complimentary portfolio reviews through Berkshire Bank Wealth Management. Ultimately the Center is working to strengthen women’s financial lives by empowering active participation in financial decision making and addressing the longevity risk that women face through a transformative approach to wealth management which centers on balance, stability, growth and overall wellness.

SUSTAINABLE FINANCE & IMPACT INVESTMENTS

Berkshire became the first public U.S. community bank holding company with under $150 billion in assets to issue a Sustainability Bond with a $100 million issuance in 2022. The Company intends to use an amount equal to the net proceeds to finance or refinance new or existing social and environmental projects consistent with its Sustainable Financing Framework including renewable electricity generation; green buildings; renewable energy technology, storage and manufacturing; energy efficiency in commercial, residential and public buildings; affordable housing; workforce housing; and financial inclusion and access activities. The framework was independently verified by Sustainalytics, a Morningstar Company, for its impact and alignment with the International Capital Market Association's (ICMA) Sustainability Bond Guidelines 2021, Green Bond Principles 2021 and Social Bond Principles 2021. Berkshire intends to publish a report in 2023 describing the amount of net proceeds allocated to each eligible project category, descriptions of specific projects financed, unallocated balances and, where feasible, qualitative and quantitative measures of the expected environmental or social impact.

Beyond the issuance of its sustainability bond, Berkshire looks for innovative ways to advance its ESG positioning and its strategic business priorities through sustainable finance and impact investing. As a result, Berkshire makes targeted impact investments in Small Business Investment Companies (SBIC) and other strategically aligned assets that are within risk appetite and drive a competitive rate of return. The Company also has a strong tax-credit business whereby it makes targeted investments in low-income housing tax credits (LIHTC), historic tax credits (HTC) and solar tax credits to further Berkshire’s ESG goals and strengthen its Community Reinvestment Act (CRA) performance. These investments help bring to life important economic development, revitalization and renewable energy projects while providing an appropriate return to the bank consistent with its capital and tax strategies.

ESG INTEGRATION, OVERSIGHT & REPORTING

ESG factors are integral to Berkshire’s business practices, risk management program, competitive positioning and its ability to deliver on its Berkshire’s Exciting Strategic Transformation (BEST) program and realize its vision of becoming a high-performing, leading socially responsible community bank. Berkshire was one of the first banks in the country to establish a dedicated committee of its Board of Directors to oversee ESG matters and are a leader among community banks in integrating ESG standards into its business strategy and operations.

The Company maintains a strong foundation of governance systems, including:

•Board level oversight of ESG, Sustainability, Climate Change, Diversity and Culture

•Corporate Responsibility & Culture Committee of its Board of Directors

•Environmental, Social and Governance (ESG) Committee

Table of Contents

•Diversity Equity & Inclusion Committee

•Responsible & Sustainable Business Policy

•Lending, credit, deposit and investment policies which incorporate ESG exclusions and due diligence requirements

•Senior managers for ESG and Diversity along with active involvement from business unit leaders and front lines in managing ESG externalities and risks

This approach strengthens risk management practices consistent with the company’s enterprise risk management program and allows Berkshire to capitalize on business opportunities consistent with its strategy.

Berkshire regularly engages directly with its stakeholders to share information about the progress it’s made in its ESG performance, including through its Corporate Responsibility website, corporate annual report, and proxy statement. Additionally, Berkshire’s annual Corporate Responsibility/ESG Report, which is aligned with Sustainability Accounting Standards Board (“SASB”) and Task Force on Climate-Related Financial Disclosure (TCFD) disclosure standards, details the Company's ESG efforts and programs.

CLIMATE CHANGE

Climate Change manifesting in the form of both physical or transition risks could adversely, either directly or indirectly, affect Berkshire’s operations, businesses, customers, communities, and its stakeholders. As the transition to a low-carbon economy accelerates, new policy emerges, and market dynamics shift, Berkshire expects that its efforts to manage its environmental footprint, mitigate the risks associated with climate change, and support the transition will allow it to strengthen its positioning as a high performing, leading socially responsible community bank. The Company continues to evolve its practices to reflect its community bank mission as well as the size, scope, and complexity of its operations.

Berkshire is actively managing climate related risks and opportunities at the board, management and employee levels. The Company’s Board of Directors Corporate Responsibility & Culture Committee provides oversight on sustainability and climate change. Management and the board evaluate climate related risks and opportunities and incorporate the results of risk assessments and discussions into strategic planning, product development, programming and relevant risk mitigating measures. All business risks are also integrated into our Enterprise Risk Management program and discussed by other applicable Board Committees including the Risk Management, Capital & Compliance Committee. Both Committees report into the full board. Beyond board level oversight of climate matters, Berkshire maintains an Environmental, Social and Governance committee comprised of senior executives throughout the Company. Berkshire also completes an annual climate change risk assessment to evaluate the bank’s operations and lending activities for potential exposure to transition and physical risks.

The results of the risk assessment guide Berkshire’s forward climate management and environmental sustainability strategies to ensure its actively managing the risks and opportunities. The physical risks of climate change over short, medium and long-term horizons include weather-related events, such as flooding and tornados, and longer-term shifts in climate patterns, such as extreme heat, rising sea levels and more severe droughts. Such events could disrupt Berkshire’s operations, impact customers, or third parties on which Berkshire relies, including through direct damage to physical assets and indirect impacts from supply chain disruption and market volatility. This could impact borrowers’ ability to repay obligations, devalue physical assets resulting in uncertain residual values and affect third-parties ability to deliver on service expectations.

Transition risks over short, medium and long-term horizons can include changes in consumer preferences, additional regulatory requirements or policy such as taxes, and use of new technologies. Such developments could increase Berkshire, its customers and third-parties operating costs, reduce demand for services from select customer segments and impact current strategies. Reputation and customer relationships could be damaged as a result of Berkshire’s practices related to climate change mitigation as well as through its or its customers direct or indirect involvement with industries or projects with heighten climate related risks. Over the long-term, transition risks could also manifest in potential credit impacts affecting borrowers’ ability to repay obligations. Collectively these physical and transition risks are managed through ongoing monitoring, existing industry exclusions, due diligence processes, policies, insurance requirements, business continuity planning, target setting and product development.

Table of Contents

As Berkshire looks to further strengthen its management of climate related risks and opportunities, it expects to continue to formalize its climate risk management program and set formal targets to reduce its Greenhouse Gas (GHG) emissions, in addition to its existing sustainable finance and renewable electricity goals. As the Company moves further along in its climate journey, it expects to continue to enhance its disclosures, programs, mitigating controls and initiatives to minimize risk, reduce its emissions as well as capitalize on the many business opportunities arising from the transition to a lower-carbon economy. Further details on Berkshire’s Climate Change governance, risk management, strategy, metrics & targets and next steps can be found in its most recent Corporate Responsibility Report.

Table of Contents

RATINGS, AWARDS & RECOGNITION

We’re proud to be recognized for our performance with local, regional, national, and international awards as well as leading third party ESG ratings* including:

•Top 17% aggregated ESG rating, achieving one of five major BEST goals

•MSCI ESG- A

•ISS ESG Quality Score - Environment: 3, Social: 1, Governance: 2

•Bloomberg ESG Disclosure- 62.81

•Sustainalytics Rated

•Communitas Award for Leadership in Corporate Social Responsibility

•Sustainable Business Network of Massachusetts Sustainable Business of the Year – Bank

•Boston Business Journal Top Charitable Contributor

•America’s Most Trustworthy Companies – Newsweek

•Forbes America’s Best Midsize Employers

•Bloomberg Gender-Equality Index

•Human Rights Campaign Corporate Equality Index Best Place to Work for LGBTQ+ equality- 100% Score

*As of December 31, 2022

Table of Contents

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MANAGEMENT OF INTEREST RATE RISK AND MARKET RISK ANALYSIS

Qualitative Aspects of Market Risk. ~~The Company’s most significant form of market risk is interest rate risk.~~ The Company seeks to ~~avoid fluctuations in its~~provide sustainable net interest income (NII) under varying economic conditions, while protecting the economic value of assets and ~~to maximize net interest income within acceptable levels~~liabilities from adverse effects of ~~risk through periods of changing~~changes in market interest rates. ~~The Company also seeks to manage~~While a number of market factors affect the ~~risk~~level of ~~interest rate changes to its net income~~NII and the economic value of ~~equity. Further, where prudent,~~our assets and liabilities, changes in interest rates is the ~~Company seeks~~most significant aspect of our market risk. Berkshire’s general objective is to ~~be positioned to benefit from expected~~maintain a neutral or asset sensitive interest rate ~~changes, within its~~ risk ~~parameters.~~profile, as measured by the sensitivity of net interest income to market interest rate changes.

The Company maintains ~~an Enterprise Risk Management/Asset-Liability Committee (ERM/ALCO) that is responsible~~a regular cadence for ~~reviewing~~review and oversight of its asset-liability policies and interest rate risk ~~position. This Committee meets regularly,~~positioning with oversight from senior management and ~~the Chief Financial Officer and Treasurer report trends and interest rate risk position to the Risk Management and Capital Committee of~~ the Board of ~~Directors on a quarterly basis.~~Directors. The manner and extent of the movement of interest rates is an uncertainty that could have a positive or negative impact on the Company’s ~~net interest income and~~ earnings.

The Company manages its interest rate risk by analyzing the ~~sensitivities~~sensitivity and ~~adjusting the~~ mix of its assets and liabilities, including derivative financial instruments. The Company also uses secondary markets, brokerages, and counterparties to accommodate customer demand for ~~long term~~long-term fixed rate loans and to provide it with flexibility in managing its balance sheet positions. When the Company enters into business combinations, it considers interest rate risk as part of its merger analysis and it integrates existing and acquired operations as appropriate to achieve its objectives for the combined businesses.

Quantitative Aspects of Market Risk. ~~Berkshire has~~ The Company quantifies its NII sensitivity using an earnings simulation model that compares a ~~targeted position to maintain~~baseline view of NII over 12 and 24 month horizons, based on a ~~neutral or asset sensitive interest rate risk profile, as measured by~~static view of the ~~sensitivity of net interest income to~~balance sheet and market interest rates, to a wide range of parallel and non-parallel rate ~~changes. The~~shocks and ramps. In addition, the Company ~~measures this sensitivity primarily by evaluating models of~~analyzes net ~~interest~~ income ~~over one year, two years,~~at risk and ~~three year time horizons~~. The Company models a base case assuming no changes in interest rates or balance sheet composition and then assuming various scenarios of ramped interest rate changes, shocked interest rate changes, changes predicted by the forward yield curve, and changes involving twists in the yield curve. The primary focus is on a two-year scenario where interest rates ramp up by 200 basis points in the first year. The Bank also evaluates its equity at risk from interest rate changes through discounted cash flow analysis. ~~This measure assesses~~The baseline view includes the ~~present value~~projected future impacts of previous interest rate changes ~~to equity~~that are projected based on ~~long term impacts of rate changes beyond the time horizons evaluated for net interest income at risk.~~contractual and behavioral assumptions.

~~The Company uses a simulation model to measure the changes in net interest income.~~ The chart below shows ~~the~~an analysis of ~~the ramped change described above, assuming~~scenarios where there is a parallel ~~shift in~~shock to interest rates and the ~~yield curve. Loans, deposits,~~impacts are measured for the first year and ~~borrowings were expected~~second year after the shock. Modeled assets and liabilities are assumed to reprice at ~~the~~respective repricing or maturity ~~date.~~dates. Pricing caps and floors are included in the ~~simulation model.~~results, where applicable. The Company uses prepayment ~~guidelines~~expectations set forth by market sources as well as Company generated data where applicable. ~~Cash~~Generally, cash flows from loans and securities are assumed to be reinvested to maintain a static balance sheet. Other assumptions about balance sheet mix are generally held constant. There were no material changes to the way that the Company measures market risk in ~~2017.~~2022. The Company has changed its summary presentation of interest rate sensitivity from an analysis of ramped changes to interest rate shocks in order to better focus on the dynamics and uncertainties of the current markets.

Table of Contents

CHANGE IN NET INTEREST INCOME

~~Item 7-7A - Table 2 - Qualitative Aspects~~


Parallel Interest Rate Shock – Basis Points
	1-12 Months		13-24 Months
	% Change		% Change
At December 31, 2022

+200	1.8	%	6.1	%
+100	0.8		2.9
-100	(1.6)		(4.3)
-200	(5.2)		(10.8)

At December 31, 2021

+200	13.1		16.1
+100	5.6		6.5
-100	(0.1)		(1.2)
-200	NA		NA

The Company was significantly asset sensitive at year-end 2021, which benefited the Company in the 2022 environment of ~~Market Risk~~rising interest rates. This environment also contributed to growing sensitivity during the year to negative earnings impacts in the unexpected situation of interest rate decreases, as asset yields increased while deposit costs remained well-controlled. Over the course of the year, the Company increased the duration of assets with the growth of the mortgage portfolio, and in the second half of the year the Company employed hedging strategies with interest rate swaps and collars. As a result, year-end 2022 interest rate sensitivity was much closer to neutral, while remaining modestly asset sensitive, in line with the market expectation of further interest rate increases in 2023. Changes to first year modeled net interest income were under 2% in modeled scenarios of 100 basis point shocks in both up and down scenarios.This sensitivity was also under 2% for a 200 basis point upward shock, compared to the modeled 13.1% sensitivity at the start of the year. At year-end 2022, a down 200 basis point shock scenario was added to the model due to the increase in interest rates during the year.The change to first year modeled net interest income was down 5.2% under this scenario.

Change in
Interest Rates-Basis
Points (Rate Ramp)

1- 12 Months 13- 24 Months
$ Change % Change $ Change % Change
(In thousands)
At December 31, 2017

+300 $ 9,806
2.95 % $ 11,193
3.40 %
+200 7,940
2.39
9,374
2.85
+100 4,683
1.41
5,890
1.79
-100 (6,424 ) (1.93 ) (12,532 ) (3.81 )

At December 31, 2016

+300 $ 9,904
3.96 % $ 7,659
3.07 %
+200 7,497
3.00
6,527
2.62
+100 4,632
1.85
4,448
1.78
-100 (5,853 ) (2.34 ) (10,100 ) (4.05 )
The Company also models net interest income sensitivity to interest rate ramps over a twelve month period. In all cases, these sensitivities were modestly lower than those modeled for interest rate shocks of the same magnitude. At year-end 2022, the modeled year one sensitivity to a +100 basis point interest rate ramp was 0.6% and the year two sensitivity was 2.6%. The Company also models sensitivity to yield curve twists, and sensitivity remained positive in most scenarios for widening and narrowing of the yield curve.

~~There were no significant changes in~~While the sensitivity of net interest income is the primary driver of the sensitivity of net income, the latter is more sensitive than the former since it is net of expenses. In the case of the first year of a 100 basis point scenario, the modeled shock sensitivity of net income is 1.7% in an upward shock and -3.3% in a downward shock.

Economic value of equity sensitivity to changes in market rates at year-end ~~2017, compared~~2022 was neutral for a 200 basis point upward shock and was -5.4% for a similar downward shock.

A critical component of modeling is the assumption of deposit interest rate sensitivity (deposit “beta”). The Company expects the total deposits beta through the duration of an interest rate cycle to be in the area of 30-40%, which includes an assumption that non-interest bearing deposit balances remain unchanged for modeling purposes. The actual cost of deposits in 2022 has been less sensitive than the Company’s traditional modeling assumptions due to the ~~start~~rapid increase in interest rates and high liquidity in the economy in the unusual conditions prevailing in 2022.

Modeled interest rate sensitivity depends on other material assumptions. Market risk exposure is affected by the level and shape of ~~the year. The Company is positioned to modestly benefit from parallel upward shifts in~~ the yield curve in ~~a ramped scenario.~~markets for financial instruments including U.S. Treasury obligations, forward interest rate derivatives, the U.S. prime interest rate, and LIBOR related rates. Also, the economic impact on customer and market behaviors of the COVID-19 pandemic remains uncertain and may cause actual events to differ from assumptions. The ~~acquisition~~behavior of ~~Commerce, with its commercial loans~~markets under the historically unusual conditions currently prevailing may be different from modeling assumptions, and ~~deposits, was estimated to be positive for Berkshire’s asset sensitivity. This offsets the liability sensitivity introduced by the termination of Berkshire’s cash flow hedges.~~

~~In a flat rate scenario,~~ the Company ~~anticipates that there would be modest margin pressure on~~continues to monitor the ~~year-end balance sheet, compared to fourth quarter results including Commerce. This is due to some asset repricings~~markets and the ~~lagged nature of deposit repricings, along with anticipated decreases~~assumptions in ~~the accretive benefits of purchase accounting. The interest sensitivity analyses are in comparison to this flat rate base case. The Company also analyzes~~ its interest sensitivity based on the forward yield curve. At year-end 2017, the markets expected short term rates to increase more than long term rates in 2018, pushing the yield curve up and flattening it. In this scenario, asset sensitivity remains positive, but closer to neutral due to the more modest increase in long term interest rates implied by the forward curve.model.

The Company also evaluates net income at risk, taking into account primarily changes in fee income that may result from interest rate changes. In dollar terms, the asset sensitivity of the Company’s net income is less than its interest income, due to the negative impact of higher rates on fee income. In percentage terms, the net income sensitivity is greater since net income is a lower base compared to net interest income. Generally, fee income is viewed as negatively correlated with changes in interest rates. Higher rates can depress demand for fixed rate products that are the chief source of loan sale gains in mortgage banking and SBA lending, as well as interest rate swap income. Higher rates also are related to higher earnings credit rates on commercial transactions accounts, which reduces deposit service charges.

The Company’s equity at risk is normally liability sensitive due to the overall shorter duration of its funds sources compared to its loans and investments. The Company estimated that the economic value of its equity was 5% negatively impacted by a modeled 200 basis point interest rate shock at year-end 2017, which was not significantly different from the 4% risk estimated at the start of the year. The Company believes that the Commerce acquisition was beneficial to its equity at risk due to the shorter duration of its earning assets and the higher concentration of transactions accounts. This benefit was offset by a change in the modeling of the Company’s deposit decay timing, with no change in modeled deposit average lives. This change was facilitated by recent systems enhancements.

A key sensitivity of the Company’s interest rate risk analysis is the behavior of deposit costs as short term rates increase. The numerous assumptions about the sensitivity of deposits result in an estimated deposit beta of about 40%, which means that a 100 basis point increase in interest rates will translate into a 40 basis point increase in deposit costs after the lagging response is fully realized. The Company estimates that the deposit beta of interest bearing deposits was 47% at year-end 2017. The Company believes that its experience in 2017 was less sensitive

Table of Contents

than its assumptions. Deposit activity in the banking industry is beginning to react to the trend of increasing short term rates following the prolonged time when rates were very low. Uncertainties also exist regarding the impact of lower federal income taxes on industry pricing competition. The Company believes that its diversified markets and sources may provide it with comparative benefit in managing its deposit pricing to achieve its market, earnings, and risk objectives.

~~Table of Contents~~

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated Financial Statements and supplementary data required by this item are presented elsewhere in this report beginning on page F-1, in the order shown below:



Management’s Report on Internal Control over Financial Reporting
Report of Independent Registered Public Accounting Firm (PCAOB ID 173)
Consolidated Balance Sheets as of December 31, ~~2017~~2022 and ~~2016~~2021
Consolidated Statements of ~~Income~~Operations for the years ended December 31, ~~2017, 2016,~~2022, 2021, and ~~2015~~2020
Consolidated Statements of Comprehensive ~~Income~~Income/(Loss) for the years ended December 31, ~~2017, 2016,~~2022, 2021, and ~~2015~~2020
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, ~~2017, 2016,~~2022, 2021, and ~~2015~~2020
Consolidated Statements of Cash Flows for the years ended December 31, ~~2017, 2016,~~2022, 2021, and ~~2015~~2020
Notes to Consolidated Financial Statements

~~Table of Contents~~

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

On August 3, 2017, the Audit Committee (the "Committee") of the Board of Directors of Berkshire Hills Bancorp, Inc. (the "Company") notified PricewaterhouseCoopers, LLP ("PwC") of its dismissal as the Company's independent registered public accounting firm. The dismissal was effective on August 9, 2017, with PwC having served as the Company's principal accountants for the first two quarters of the fiscal year ended December 31, 2017. The Committee participated in, and approved the decision to change its independent registered public accounting firm.None.

PwC's audit reports on the Company's consolidated financial statements as of and for the years ended December 31, 2016 and December 31, 2015 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.

During the two fiscal years ended December 31, 2016 and December 31, 2015 and the subsequent interim period through August 9, 2017, there were (i) no disagreements between the Company and PwC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which, if not resolved to the satisfaction of PwC, would have caused PwC to make reference thereto in their reports on the consolidated financial statements for such years, and (ii) no "reportable events" as that term is defined in Item 304(a)(1)(v) of Regulation S-K.

Also on August 3, 2017, the Committee completed a competitive selection process and selected Crowe Horwath LLP ("Crowe") as the Company's independent registered public accounting firm, effective August 10, 2017. During the two fiscal years ended December 31, 2016 and December 31, 2015 and the subsequent interim period preceding the selection of Crowe, the Company did not consult with Crowe regarding: (i) the application of accounting principles to a specified transaction, either completed or proposed; (ii) the type of audit opinion that might be rendered on the Company's financial statements, and Crowe did not provide any written report or oral advice that Crowe concluded was an important factor considered by the Company in reaching a decision as to any such accounting, auditing or financial reporting issue; or (iii) any matter that was either the subject of a disagreement with PwC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure or the subject of a reportable event.

ITEM 9A. CONTROLS AND PROCEDURES

The Company’s management, including the Company’s Principal Executive Officer and Principal Financial Officer, have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a and 15(d) -15(e) promulgated under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) as of December 31, ~~2017.~~2021. Based upon their evaluation, the Principal Executive Officer and Principal Financial Officer concluded that, as of that date, the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the “SEC”): (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

The Company evaluated changes in its internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) that occurred during the last fiscal quarter. The Company determined that there were no changes that materially affected, or were reasonably likely to materially affect, the Company’s internal control over financial reporting. Management’s report on internal control over financial reporting and the independent registered public accounting firm’s report on the Company’s internal control over financial reporting are contained in “Item 8 — Consolidated Financial Statements and Supplementary Data.”

~~Table of Contents~~

ITEM 9B. OTHER INFORMATION

None.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

Table of Contents

PART III

Table of Contents

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

For information concerning the directors of the Company, the information contained under the sections captioned ~~“Proposals to be Voted on by Stockholders - Proposal~~“Proposal 1 - Election of ~~Directors”~~Directors for a One-Year Term” in Berkshire’s Proxy Statement for the ~~2018~~2023 Annual Meeting of Stockholders (“Proxy Statement”) is incorporated by reference. The following table sets forth certain information regarding the executive officers of the Company.



Name			Age	Position
~~Michael P. Daly~~Nitin J. Mhatre			5652	President and Chief Executive Officer of the Company; Chief Executive Officer - Berkshire Bank; Director of Berkshire Hills Bancorp and Berkshire Bank
~~Richard M. Marotta~~Sean A. Gray			5946	Senior Executive Vice President, ~~of the Company;~~Chief Operating Officer; President - Berkshire Bank
~~Sean A. Gray~~David Rosato			4261	~~Senior Executive Vice President of the Company; Chief Operating Officer - Berkshire Bank~~
~~James M. Moses~~	41	Senior Executive Vice President, Chief Financial Officer ~~of the Company; Chief Financial Officer - Berkshire Bank~~
~~George F. Bacigalupo~~Lucia “Lucy” Bellomia			6357	Senior Executive Vice President, ~~Commercial~~Head of Retail Banking ~~- Berkshire Bank~~
~~Michael D. Carroll~~James Brown			5657	Senior Executive Vice President, Head of Commercial Banking ~~and Specialty Lending - Berkshire Bank~~
~~Tami F. Gunsch~~Jennifer M. Carmichael			5546	Executive Vice President, ~~& Director of Relationship Banking - Berkshire Bank~~Chief Internal Audit Officer
Jacqueline Courtwright			59	Senior Executive Vice President, Chief Human Resources and Culture Officer
Ashlee Flores			38	Executive Vice President, Chief Compliance Officer
Philip Jurgeleit			53	Executive Vice President, Chief Credit Officer
Gregory D. Lindenmuth			5055	Senior Executive Vice President, Chief Risk Officer ~~- Berkshire Bank~~
~~Allison P. O'Rourke~~Wm. Gordon Prescott			4261	Senior Executive Vice President, ~~Finance~~General Counsel and Corporate Secretary
Sumant Pustake			38	Executive Vice President, Chief Transformation & ~~Investor Relations -~~Strategy Officer
Ellen Steinfeld			61	Senior Executive Vice President, Head of Consumer Lending & Payments
Jason T. White			47	Senior Executive Vice President, Chief Information Officer – Berkshire Bank

The executive officers are elected annually and hold office until their successors have been elected and qualified or until they are removed or replaced. ~~Mr. Daly is employed pursuant to a three-year employment agreement which renews automatically if not otherwise terminated pursuant to its terms.~~

BIOGRAPHICAL INFORMATION



			~~Michael P. Daly.~~Nitin J. Mhatre. Age ~~56.~~ 52. Mr. ~~Daly has served as~~Mhatre was appointed to the role of President and Chief Executive Officer of the Company and Chief Executive Officer of the Bank ~~since October 2002. Before these appointments, he served as Executive Vice President and Senior Loan Officer of the Bank.~~ in January 2021.He ~~has been an employee since 1986. He has served~~was also appointed as a Director of the Company and the Bank. Prior to joining the Company, Mr. Mhatre was Executive Vice President, Community Banking, at Webster Bank, ~~since 2002.~~where he led consumer and business banking businesses. Before joining Webster in 2009, Mr. Mhatre spent 13 years at Citi Group in various leadership roles across consumer-related businesses globally.



	~~Richard M. Marotta.~~Sean A. Gray. Age ~~59.~~ 46. Mr. ~~Marotta~~Gray was ~~promoted~~appointed to the role of Senior Executive Vice President, ~~of the Company and~~Chief Operating Officer; President of the Bank in ~~September 2015, having previously served as Executive Vice President, Chief Risk Officer since January 2010, as well as Chief Administrative Officer since July 2013.~~November 2018. He ~~is responsible for overall risk management, compliance, human resources, information technology, legal, and strategic services, and oversees audit, which reports to the Board. Mr. Marotta~~ was previously ~~Executive Vice President and Group Head, Asset Recovery at KeyBank.~~

~~Table of Contents~~



	~~Sean A. Gray. Age 42. Mr. Gray was promoted to~~ Senior Executive Vice President of the Company and Chief Operating Officer of the Bank ~~in September 2015, having previously served as Executive Vice President, Retail Banking~~ since 2010 and as a Senior Vice President since April 2008. Mr. Gray is responsible for the operating teams of the bank, including retail banking, commercial banking, specialty lending, mortgage banking, wealth management, insurance, and marketing.2015. Mr. Gray joined the Company in ~~January~~retail banking in 2007 ~~as First~~and attained the position of Executive Vice President, Retail Banking. ~~Prior to joining the Bank, Mr. Gray~~Previously, he was Vice President and Consumer Market Manager at Bank of America, in Waltham, Massachusetts.

Table of Contents



			~~James M. Moses.~~ David Rosato. Age ~~41.~~61. Mr. ~~Moses is~~Rosato joined the Company in February 2023 as Senior Executive Vice President, Chief Financial ~~Officer~~Officer. He spent the last 15 years with People’s United Financial, Inc., eight of which as Chief Financial Officer. Prior to joining People’s United, Mr. Rosato worked at Webster Financial Corporation, including serving as its Treasurer, and M&T Bank Corporation. Mr. Rosato is a former board member of the ~~Company and the~~Federal Home Loan Bank ~~since joining the Bank in July 2016. He~~of Boston.
			Lucia “Lucy” Bellomia. Age 57. Ms. Bellomia is ~~responsible for the accounting, treasury, tax, and capital markets functions. Mr. Moses previously served at Webster Bank as~~ Senior Executive Vice President and ~~Asset/Liability Manager. Mr. Moses joined Webster~~Head of Retail Banking. She oversees the retail branch network, branch training, the MyBanker program, Call Center, Branch Operations, Retail Sales and Service Delivery. Prior to joining Berkshire in September 2021, she served as the Executive SVP, PM, Community Banking, Northeast Region, for Bank of America. She previously held positions at the Police and Fire Credit Union in ~~2011 from M&T~~Philadelphia, Santander Bank, ~~where he spent four years in various roles including head mortgage trader, deposit products pricing manager~~PNC Bank, Sun National Bank, and ~~consumer credit card product manager.~~Pioneer Savings and Loans.



	~~George F. Bacigalupo.~~James Brown. Age ~~63.~~ 57. Mr. ~~Bacigalupo was promoted to~~Brown joined the Company in January 2023 as Senior Executive Vice President, Commercial ~~Banking in September 2015, having previously served as an Executive Vice President since October 2013 and Senior Vice President, Chief Credit Officer since 2011.~~Banking. Mr. ~~Bacigalupo~~Brown is responsible for all aspects of commercial banking operations, including the middle-market, business banking and asset based lending ~~teams~~teams. Previously, he spent more than 20 years at Boston Private Bank & Trust Company in ~~Eastern~~multiple senior executive roles including Co-President, EVP, Head of Commercial Banking and ~~Central Massachusetts~~Credit Administration, and ~~Connecticut. Previously, Mr. Bacigalupo was EVP~~Chief Lending Officer. He served with Silicon Valley Bank as Head of Specialty ~~Lending at TD Banknorth, where he established~~Commercial within the ~~ABL and other middle-market lending groups. Subsequently, at TD~~Private Bank, ~~he was~~following the ~~Senior Lender for New England.~~acquisition of Boston Private in 2021
		Jennifer M. Carmichael. Age 46. Ms. Carmichael was promoted to Executive Vice President, Chief Internal Audit Officer of Berkshire Bank in November 2020. She reports to the Audit Committee of the Board and administratively to the CEO. Ms. Carmichael previously served as Senior Vice President and Audit Manager. She joined the Bank in 2016 from Accume Partners where she served as Senior Audit Manager to several clients in the New York and New England regions, including Berkshire.

Jacqueline Courtwright. Age 59. Ms. Courtwright is Senior Executive Vice President, Chief Human Resources and has served as Culture Officer since September 2020.She had been appointed as Senior Vice President, Chief Human Resources Officer in July 2019.Prior to joining Berkshire in 2012, Ms. Courtwright was VP, Human Resources Business Partner at Citizen Bank and also held senior human resource roles during her 20 years at KeyBank.

Table of Contents



			~~Michael D. Carroll.~~Ashlee Flores. Age ~~56.~~ ~~Mr. Carroll is~~38. Ms. Flores was promoted to Executive Vice President, ~~Commercial Banking~~Chief Compliance Officer in September 2022. She oversees all aspects of the compliance risk management program, including compliance with the Bank Secrecy Act, Community Reinvestment Act, consumer protection laws and ~~Specialty~~regulations, as well as the Security and Fraud Investigations functions. Ms. Flores previously served as SVP, Compliance, where she oversaw Berkshire Bank's compliance program. Prior to joining Berkshire Bank, Ms. Flores was a compliance officer at Hampden Bank in Springfield, MA where she managed the compliance and audit program.
			Philip Jurgeleit. Age 53. Mr. Jurgeleit joined the Company in January 2023 as Executive Vice President, Chief Credit Officer. He oversees all aspects of the company's credit underwriting, policy, and approval processes. Mr. Jurgeleit most recently served as SVP and Senior Director of Credit Risk at Santander Bank where he was responsible for all aspects of credit risk management including credit approval, asset quality, underwriting guidelines, and credit policies for the Middle Market, Mid-Corporate, Asset Based Lending, and Healthcare/Not-for-Profit business units. He also held senior leadership roles at Citizens Bank, Webster Bank and Bank of ~~Berkshire~~America.
			Gregory D. Lindenmuth. Age 55. Mr. Lindenmuth is Senior Executive Vice President, Chief Risk Officer of the Bank, a position he was promoted to in October ~~2017.~~2018. Mr. Carroll has previously held the positions of EVP, Chief Risk Officer and SVP, Chief Credit Officer managing the risk and credit departments of the Bank. In his role as EVP, Commercial Banking and Specialty Lending he is responsible for Firestone Financial (equipment leasing) and 44 Business Capital (SBA Lending) and is the executive leader of the regional commercial teams in Berkshire County, Vermont, Albany, Syracuse, and the Mid-Atlantic region. He joined the company in 2009 as SVP, New York Regional Commercial Leader. Previously, Mr. Carroll was Senior Vice President, Middle Market banking at KeyBank.



	~~Tami F. Gunsch. Age 55.~~ Ms. Gunsch is Executive Vice President & Director of Relationship Banking, a position she was promoted to in January 2018. In this role, Ms. Gunsch will develop and lead the relationship banking strategy across all lines of business. She is further responsible for all aspects of the retail banking consumer experience, including branch operations, consumer lending, call center, and electronic/mobile banking. Ms. Gunsch has previously held the positions of EVP, Retail Banking and Senior Vice President since October 2011. Ms. GunschLindenmuth joined Berkshire in 2016 from ~~Citizens Bank in 2009 as First VP of Retail Banking.~~

~~Table of Contents~~



	~~Gregory D. Lindenmuth. Age 50.~~ ~~Mr. Lindenmuth is~~ the ~~Executive Vice President, Chief Risk Officer of Berkshire Bank. Mr. Lindenmuth is responsible~~FDIC where he was employed for ~~Credit, credit/risk administration,~~24 years and ~~loan workout. Mr. Lindenmuth previously served as~~held multiple positions including Senior Risk Examiner for the Division of Risk Management Supervision ~~with~~and Acting Regional Manager for the ~~FDIC, where he was employed for 24 years.~~Division of Insurance and Research. With the FDIC, Mr. Lindenmuth was also a Capital Markets, Mortgage Banking, and Fraud ~~Specialist and a member of the National Examination Procedures Committee.~~Specialist.
		Wm. Gordon Prescott, Age 61. Mr. Prescott is Senior Executive Vice President, General Counsel and Corporate Secretary, a position he was promoted to in October 2018. Mr. Prescott joined Berkshire in 2008 as VP, General Counsel and Corporate Secretary. Mr. Prescott has 30 plus years of experience in the legal profession, including extensive experience as in-house corporate counsel, most recently with KB Toys Inc. prior to joining the Bank.

Sumant Pustake. Age 38_. Mr. Pustake was promoted to Executive Vice President in February 2023 and has served as Chief Transformation and Strategy Officer since June 2021. Mr. Pustake previously oversaw Berkshire's corporate development efforts, where he served as the development leader and helped define and realize Berkshire’s vision and growth strategy. Prior to joining Berkshire Bank, he served as Vice President, Head of Corporate Credit for Commerce Bank and Trust at the time of its acquisition by Berkshire in 2017.

Table of Contents



			~~Allison P. O’Rourke.~~Ellen Steinfeld, Age ~~42.~~ 61.Ms. ~~O’Rourke~~Steinfeld is Senior Executive Vice President ~~Finance~~and Head of Consumer Lending & ~~Investor Relations, a position~~Payments. She is responsible for Mortgage Banking sales and operations, Home Equity, Consumer Lending and Payments. Prior to joining Berkshire in September 2021, she ~~assumed~~was President of Innovative Lending Strategic Solutions LLC. Before her consulting role, she was Managing Director and US Consumer Lending Executive for TIAA-CREF, where she managed Mortgage Lending, Small Business Lending, Consumer Lending. She has also held management positions at Hudson City Savings, Citizens Bank, RBC Wealth Management, and E*TRADE Financial. (Note:Ms. Steinfeld’s stock ownership reports to the SEC are filed under her legal name of Ellen Tulchiner).
			Jason T. White, Age 47.Mr. White is Senior Executive Vice President and was named Chief Information Officer of Berkshire Bank in ~~January 2017, having~~November 2020.He previously served as ~~Executive~~Senior Vice President, ~~Investor Relations~~Chief Technology Officer ~~and Financial Institutions Banking. She joined the Company in 2013 and is responsible for investor relations, financial institutions banking, and financial planning and analysis. Ms. O’Rourke~~since May 2019 when he joined the Bank following the acquisition of Savings Institute Bank & Trust, where he served as ~~Vice President in 2013 from the NYSE Euronext~~Chief Information Officer and ~~previously worked in securities brokerage with Goldman Sachs and Speer Leeds and Kellogg.~~Information Security Officer.

Table of Contents

Reference is made to the cover page of this report and to the section captioned ~~“Other~~“Additional Information - Other Information Relating to Directors and Executive Officers - Delinquent Section 16(a) ~~Beneficial Ownership Reporting Compliance”~~Reports” in the Proxy Statement for information regarding compliance with Section 16(a) of the Exchange Act. For information concerning the audit committee and the audit committee financial expert, reference is made to the section captioned ~~“Corporate~~“Proposal 1 - Election of Directors for a One-Year Term", "Proposal 1 - Election of Directors for One Year Term - Corporate Governance - Committees of the Board of Directors”, and ~~“Corporate Governance~~“Proposal 1 - ~~Audit Committee”~~Election of Directors for a One Year Term - Board Committees and Responsibilities" in the Proxy Statement.

For information concerning the Company’s code of ethics, the information contained under the section captioned ~~“Corporate~~“Proposal 1 - Election of Directors for a One Year Term - Corporate Governance - Code of Business Conduct and Anonymous Reporting Line Policy” in the Proxy Statement is incorporated herein by reference.

A copy of the Company’s code of ethics is available to stockholders on the Company’s website atat:

~~http://ir.berkshirebank.com~~.berkshirebank.com under the Investor Relations tab.

ITEM 11. EXECUTIVE COMPENSATION

For information regarding executive compensation, the sections captioned ~~“Director Compensation”~~“Proposal 1 - Election of Directors for a One-Year Term”, ~~“Compensation Discussion~~“Proposal 1 - Election of Directors of a One Year Term - Corporate Governance - Committees of the Board of Directors”, and ~~Analysis,”~~“Proposal 1 - Election of Directors for a One Year Term - Board Committees and ~~“Executive Compensation”~~Responsibilities” in the Proxy Statement are incorporated herein by reference.

For information regarding the Compensation Committee Report, the section captioned “Compensation ~~Committee Report”~~Discussion and Analysis” in the Proxy Statement is incorporated herein by reference.

~~Table of Contents~~

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS

(a)Security Ownership of Certain Beneficial Owners

Information required by this item is incorporated herein by reference to the section captioned ~~“Stock~~“Additional Information - Stock Ownership” in the Proxy Statement.

(b)Security Ownership of Management

Information required by this item is incorporated herein by reference to the section captioned ~~“Stock~~“Additional Information - Stock Ownership” in the Proxy Statement.

(c)Changes in Control

Management of Berkshire knows of no arrangements, including any pledge by any person of securities of Berkshire, the operation of which may at a subsequent date result in a change in control of the registrant.

(d)Equity Compensation Plan Information

The following table sets forth information, as of December 31, ~~2017,~~2022, about Company common stock that may be issued upon exercise of options under stock-based benefit plans maintained by the Company, as well as the number of securities available for issuance under equity compensation plans:


Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column)
Equity compensation plans approved by security holders	49,200	$	25.62	1,500,355
Equity compensation plans not approved by security holders	—	—		—

Total	49,200	$	25.62	1,500,355

Plan category
Number of securities
to be issued upon
exercise of
outstanding options, warrants and rights

Weighted-average
exercise price of
outstanding options, warrants and rights

Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities reflected in the first column)
Equity compensation plans approved by security holders 75,589
$ 13.59
389,536
Equity compensation plans not approved by security holders —
—
—
Total 75,589
$ 13.59
389,536

Table of Contents

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item is incorporated herein by reference to the sections captioned ~~“Other~~“Additional Information - Other Information Relating to Directors and Executive Officers —- Transactions with Related ~~Persons”~~Persons" and ~~“Procedures~~“Additional Information - Other Information Relating to Directors and Executive Officers - Procedures Governing Related Persons Transactions” in the Proxy Statement. Information regarding director independence is incorporated herein by reference to the section ~~“Proposals to be Voted on by Shareholders — Proposal~~“Proposal 1 —- Election of ~~Directors”~~Directors for a One Year Term” in the Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this item is incorporated herein by reference to the section captioned ~~“Proposals to be Voted on by Shareholders — Proposal 6~~“Proposal 3 — Ratification of the Appointment of the Independent Registered Public Accounting Firm” in the Proxy Statement.

Table of Contents

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

~~(a)~~

~~[1]~~ ~~Consolidated Financial Statements~~

(a) [1] Consolidated Financial Statements

•Report of Independent Registered Public Accounting Firm

•Consolidated Balance Sheets as of December 31, 2022 and 2021

•Consolidated Statements of Operations for the Years Ended December 31, 2022, 2021, and 2020

•Consolidated Statements of Comprehensive (Loss)/Income for the Years Ended December 31, 2022, 2021, and 2020

•Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 2022, 2021, and 2020

•Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021, and 2020

•Notes to Consolidated Financial Statements


•	~~Report of Independent Registered Public Accounting Firm~~


•	~~Consolidated Balance Sheets as of December 31, 2017 and 2016~~


•	~~Consolidated Statements of Income for the Years Ended December 31, 2017, 2016, and 2015~~


•	~~Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2017, 2016, and 2015~~


•	~~Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 2017, 2016, and 2015~~


•	~~Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 2016, and 2015~~


•	~~Notes to Consolidated Financial Statements~~

The Consolidated Financial Statements required to be filed in our Annual Report on Form 10-K are included in Part II, Item 8 hereof.


~~[2]~~	~~Financial Statement Schedules~~

[2] Financial Statement Schedules

All financial statement schedules are omitted because the required information is either included or is not applicable.

Table of Contents

[3] Exhibits


~~[3]~~	~~Exhibits~~



3.1		Amended Certificate of Incorporation of Berkshire Hills Bancorp, Inc. (1)
3.2		Amended and Restated Bylaws of Berkshire Hills Bancorp, Inc. (2)
~~3.3~~3.4		~~Certificate of Amendment to the Certificate of Incorporation of Berkshire Hills Bancorp, Inc. (3)~~
~~3.4~~	Certificate of Designations of the Series B Non-Voting Preferred Stock ~~(4)~~(3)
4.1		Form of Common Stock Certificate of Berkshire Hills Bancorp, Inc. (1)
4.2		Note Subscription Agreement by and among Berkshire Hills Bancorp, Inc. and certain subscribers dated September 20, 2012 (5)
~~10.1~~4.3		~~Amended and Restated~~Description of Berkshire Hills Bancorp, Inc. Securities (6)
10.1		Three-Year Employment Agreement by and among Berkshire ~~Bank, Berkshire~~ Hills Bancorp, Inc., Berkshire Bank and ~~Michael P. Daly (6)~~Nitin J. Mhatre (7)
10.2		~~Amended and Restated~~Berkshire Bank Supplemental Executive Retirement Agreement ~~between Berkshire Bank and Michael P. Daly (7)~~entered into with Nitin J. Mhatre (8)
10.3		~~Three Year Executive Change in Control Agreement by and among Berkshire Bank, Berkshire Hills Bancorp, Inc., and George F. Bacigalupo (8)~~
~~10.4~~	~~Three-Year Executive Change in Control Agreement by and among Berkshire Bank, Berkshire Hills Bancorp, Inc., and James M. Moses (9)~~
~~10.5~~	~~Three Year Change in Control Agreement by and among Berkshire Bank, Berkshire Hills Bancorp, Inc. and Richard M. Marotta (10)~~
~~10.6~~	~~Supplemental Executive Retirement Agreement between Berkshire Bank and Richard M. Marotta (11)~~
~~10.7~~	Amended and Restated Three Year Change in Control Agreement by and among Berkshire Hills Bancorp, Inc., Berkshire Bank and Sean A. Gray (9)
10.4		Supplemental Executive Retirement Agreement between Berkshire Bank and Sean A. Gray (10)
10.5		Three Year Executive Change in Control Agreement by and among Berkshire Hills Bancorp, Inc., Berkshire Bank and ~~Sean A. Gray (12)~~George F. Bacigalupo (11)
~~10.8~~10.6		Berkshire Bank Enhanced Change in Control Severance Plan (Gregory D. Lindenmuth and Brett Brbovic) (12)
10.7		Form of Split Dollar Agreement entered into with ~~Michael P. Daly,~~ Sean A. Gray ~~and Richard M. Marotta~~ (13)
~~10.9~~10.8		~~Endorsement Agreement by and among Berkshire Hills Bancorp, Inc. and Geno Auriemma dated as of May 14, 2012 (14)~~
~~10.10~~	~~Berkshire Hills Bancorp, Inc. 2011 Equity Incentive Plan (15)~~
~~10.11~~	~~Berkshire Hills Bancorp, Inc. 2013 Equity Incentive Plan (16)~~
~~10.12~~	Berkshire Bank Executive Long-Term Care Insurance Plan ~~(17)~~(14)
~~10.13~~10.9		Berkshire ~~Bank 2017~~Hills Bancorp, Inc. 2018 Equity Incentive Plan (15)
10.10		Senior Executive Short Term Incentive Plan (16)
~~11.0~~10.11		~~Statement re: Computation of Per Share Earnings is incorporated herein by reference to Part II, Item 8, “Consolidated Financial Statements and Supplementary Data”~~Berkshire Hills Bancorp, Inc. 2022 Equity Incentive Plan (17)
~~21.0~~10.12		Transition Agreement and Release of Claims entered into with Subhadeep Basu (18)
10.13		Transition Agreement entered into with Deborah Stephenson (19)
21.0		Subsidiary Information
23.1		Consent of Crowe ~~Horwath~~ LLP
~~23.2~~31.1		~~Consent of PricewaterhouseCoopers LLP~~
~~31.1~~	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101		Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Statements of Condition, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements tagged as blocks of text and in detail

Table of Contents



(1)		Incorporated herein by reference from the Exhibits to Form 10-Q as filed on August 9, 2018
~~(1)~~(2)		Incorporated herein by reference from the Exhibits to the Form 8-K as filed on June 26, 2017.
(3)		Incorporated herein by reference from the Exhibits to Form S-1, Registration Statement and amendments thereto, initially filed on March 10, 2000, Registration No. 333-32146.
~~(2)~~(4)		~~Incorporated herein by reference from the Exhibits to the Form 8-K as filed on June 26, 2017.~~
~~(3)~~	~~Incorporated herein by reference from the Exhibits to the Form 10-Q as filed on November 9, 2017.~~
~~(4)~~	Incorporated herein by reference from the Exhibits to the Form 8-K as filed on October 16, 2017.
(5)		Incorporated herein by reference from the Exhibits to the Form 8-K as filed on September 26, 2012.
(6)		Incorporated herein by reference from ~~the Exhibits~~Exhibit 4.3 to the ~~Form 8-K as filed on January 6, 2009.~~
~~(7)~~	~~Incorporated herein by reference from the Exhibits to~~ Form 10-K as filed on ~~March 16, 2009.~~February 28, 2020.
~~(8)~~(7)		Incorporated herein by reference from the Exhibit to the Form ~~10-K~~8-K as filed on ~~March 17, 2014.~~January 26, 2021.
~~(9)~~(8)		Incorporated herein by reference from the ~~Exhibits~~Exhibit to the Form 8-K as filed on ~~September 23, 2016.~~April 2, 2021.
~~(10)~~(9)		~~Incorporated herein by reference from the Exhibits to the Form 10-K as filed on March 16, 2010.~~
~~(11)~~	~~Incorporated herein by reference from the Exhibits to the Form 8-K as filed on June 29, 2016.~~
~~(12)~~	Incorporated herein by reference from the Exhibits to the Form 10-K as filed on March 16, 2011.
~~(13)~~(10)		Incorporated herein by reference from the Exhibits to the Form 8-K as filed on February 22, 2019.
(11)		Incorporated herein by reference from the Exhibits to the Form 10-K as filed on March 17, 2014.
(12)		Incorporated herein by reference from the Exhibits to the Form 10-K as filed on February 28, 2020.
(13)		Incorporated herein by reference from the Exhibit to the Form 8-K as filed on January 19, 2011.
(14)		~~Incorporated by reference from Exhibit 10.16 to the Form 10-Q as filed on August 9, 2012.~~
~~(15)~~	~~Incorporated herein by reference from the Appendix to the Proxy Statement as filed on March 24, 2011.~~
~~(16)~~	~~Incorporated herein by reference from the Appendix to the Proxy Statement as filed on April 2, 2013.~~
~~(17)~~	Incorporated herein by reference from the Exhibits to the Form 8-K as filed on January 23, 2015.
(15)		Incorporated herein by reference from the Appendix to the Proxy Statement as filed on April 6, 2018.
(16)		Incorporated herein by reference from the Exhibits to the Form 10-Q as filed on May 10, 2019.
(17)		Incorporated herein by reference from the Appendix to the Proxy Statement as filed on April 8, 2022.
(18)		Incorporated herein by reference from the Exhibit to the Form 8-K as filed on October 13, 2022.
(19)		Incorporated herein by reference from the Exhibit to the Form 8-K as filed on September 12, 2022.

ITEM 16. FORM 10-K SUMMARY

None.

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



	Berkshire Hills Bancorp, Inc.
Date: March 1, ~~2018~~2023	By:	/s/ ~~Michael P. Daly~~Nitin J. Mhatre
		~~Michael P. Daly~~Nitin J. Mhatre
		President & Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ ~~Michael P. Daly~~Nitin J. Mhatre

Director, President, & Chief Executive Officer

March 1, ~~2018~~2023

~~Michael P. Daly~~Nitin J. Mhatre

(principal executive officer)

/s/ ~~James M. Moses~~R. David Rosato

Senior Executive Vice President, Chief Financial Officer

March 1, ~~2018~~2023

~~James M. Moses~~R. David Rosato

(principal financial ~~and~~officer)

/s/ Brett Brbovic

Senior Managing Director, Chief Accounting Officer

March 1, 2023

Brett Brbovic

(principal accounting officer)

~~/s/ William J. Ryan~~

~~Non-Executive Chairman~~

~~March 1, 2018~~

~~William J. Ryan~~

~~/s/ Paul T. Bossidy~~

~~Director~~

~~March 1, 2018~~

~~Paul T. Bossidy~~

/s/ David M. Brunelle

~~Director~~Chairperson

March 1, ~~2018~~2023

David M. Brunelle

/s/ Baye Adofo-Wilson

Director

March 1, 2023

Baye Adofo-Wilson

/s/ ~~Robert M. Curley~~Nina A. Charnley

Director

March 1, ~~2018~~2023

~~Robert M. Curley~~Nina A. Charnley

/s/ John B. Davies

Director

March 1, ~~2018~~2023

John B. Davies

/s/ Mihir A. Desai

Director

March 1, 2023

Mihir A. Desai

/s/ ~~J. Williar Dunlaevy~~William H. Hughes, III

Director

March 1, ~~2018~~2023

~~J. Williar Dunlaevy~~William H. Hughes, III

/s/ Jeffrey W. Kip

Director

March 1, 2023

Jeffrey W. Kip

/s/ ~~Cornelius D. Mahoney~~Sylvia Maxfield

Director

March 1, ~~2018~~2023

~~Cornelius D. Mahoney~~Sylvia Maxfield

~~/s/ Pamela A. Massad~~

~~Director~~

~~March 1, 2018~~

~~Pamela A. Massad~~

/s/ Laurie Norton Moffatt

Director

March 1, ~~2018~~2023

Laurie Norton Moffatt

/s/ Karyn Polito

Director

March 1, 2023

Karyn Polito

/s/ ~~Richard J. Murphy~~Jonathan I. Shulman

Director

March 1, ~~2018~~2023

~~Richard J. Murphy~~Jonathan I. Shulman

/s/ Michael A. Zaitzeff

Director

March 1, 2023

~~/s/ Patrick J. Sheehan~~Michael A. Zaitzeff

~~Director~~

~~March 1, 2018~~

~~Patrick J. Sheehan~~

~~/s/ D. Jeffrey Templeton~~

~~Director~~

~~March 1, 2018~~

~~D. Jeffrey Templeton~~

Table of Contents

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s Consolidated Financial Statements for external reporting purposes in accordance with generally accepted accounting principles.

As of December 31, ~~2017,~~2022, management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on the framework established in Internal Control—Integrated Framework issued in 2013, by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management has determined that the Company’s internal control over financial reporting as of December 31, ~~2017~~2022 was effective.

Management has excluded Commerce Bancshares Corp. and subsidiaries ("Commerce") from its assessment of internal control over financial reporting as of December 31, 2017 because this entity was acquired in a business combination in 2017. Commerce represents 17% of total assets and less than 1% of total revenue, respectively, of the related Consolidated Financial Statement amounts as of and for the year ended December 31, 2017.

The Company’s internal control over financial reporting includes policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

The effectiveness of the Company’s internal control over financial reporting as of December 31, ~~2017~~2022 has been audited by Crowe ~~Horwath~~ LLP, an independent registered public accounting firm, as stated in their report, which follows. This report expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, ~~2017.~~2022.



/s/ ~~Michael P. Daly~~Nitin J. Mhatre						/s/ ~~James M. Moses~~R. David Rosato
~~Michael P. Daly~~Nitin J. Mhatre						~~James M. Moses~~R. David Rosato
President & Chief Executive Officer						Senior Executive Vice President & Chief Financial Officer
March 1, ~~2018~~2023						March 1, ~~2018~~2023

F-1

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and the Board of Directors of

of Berkshire Hills Bancorp, Inc.

Boston, Massachusetts

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance ~~sheet~~sheets of Berkshire Hills Bancorp, Inc. (the "Company") as of December 31, ~~2017,~~2022 and 2021, the related consolidated statements of ~~income,~~operations, comprehensive (loss)/income, changes in shareholders’ equity, and cash flows for each of the ~~year~~years in the three-year period ended December 31, ~~2017,~~2022, and the related notes (collectively referred to as the "financial statements"). We also have audited the Company’s internal control over financial reporting as of December 31, ~~2017,~~2022, based on criteria established in Internal Control -– Integrated ~~Framework~~Framework: (2013) issued ~~in 2013~~ by the Committee of Sponsoring Organizations of the Treadway Commission ~~(“COSO”)~~(COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, ~~2017,~~2022 and 2021, and the results of its operations and its cash flows for each of the ~~year~~years in the three-year period ended December 31, ~~2017~~2022 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2017,~~2022, based on criteria established in Internal Control -– Integrated ~~Framework~~Framework: (2013) issued ~~in 2013~~ by COSO.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for credit losses effective January 1, 2020 due to the adoption of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification No. 326, Financial Instruments – Credit Losses (“ASC 326”). The Company adopted the new credit loss standard using the modified retrospective method such that prior period amounts are not adjusted and continue to be reported in accordance with previously applicable generally accepted accounting principles.

Basis for Opinions

The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.Our responsibility is to express an opinion on the Company’s financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

F-2

Table of Contents

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our ~~audit~~audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our ~~audit~~audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

As permitted, the Company has excluded the operations of Commerce Bancshares Corp. and subsidiaries (“Commerce”), acquired during 2017 and which is described in Note 2 of the financial statements, from the scope of management’s report on internal control over financial reporting. As such, Commerce has also been excluded from the scope of our audit of internal control over financial reporting.

Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

~~F-2~~

~~Table of Contents~~

Definition and Limitations of Internal Control ~~over~~Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

~~/s/~~

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Credit Losses for loans

The estimate of expected credit losses is based on relevant information about current conditions, past events, and reasonable and supportable forward-looking forecasts regarding collectability of the reported amounts. In order to estimate the expected credit losses for loans evaluated on a pooled basis, the Company utilizes a static pool migration methodology which calculates a historical loss rate for each of the identified loan segments. The historical loss rates are then adjusted for current and asset specific characteristics (also referred to as qualitative adjustments) and for expected changes to current conditions over the reasonable and supportable forecast period (also referred to as forecast). Each of these key components of the allowance for credit loss calculation is complex and requires a high volume of data input.

F-3

Table of Contents

Auditing the allowance for credit losses was especially challenging and identified by us as a critical audit matter given the high volume of data inputs and judgements made by management.Auditing the allowance for credit loss calculation involved significant audit effort, including the involvement of experienced audit personnel.

The primary procedures we performed to address this critical audit matter included:

Testing the effectiveness of internal controls over management’s allowance for credit loss calculation including the design and operating effectiveness to address:

•Completeness and accuracy of the reports utilized within the allowance for credit loss calculation.

•The mathematical accuracy of the allowance for credit loss calculation.

•The accuracy of application of information within the allowance for credit loss calculation.

•Significant assumptions and judgements applied within the allowance for credit loss calculation.

Substantively testing management’s process to estimate the allowance for credit loss calculation included:

•Testing the completeness and accuracy of the underlying internal data utilized to prepare the calculation.

•Evaluating the relevance and reliability of the underlying external data utilized to prepare the calculation.

•Testing the mathematical accuracy, including the application of data and assumptions, of the allowance for credit loss calculation.

•The reasonableness of the significant judgements and assumptions utilized within the allowance for credit loss calculation.

/s/Crowe ~~Horwath~~ LLP

We have served as the Company's auditor since ~~2017~~2017.

New York, New York

March 1, ~~2018~~2023

~~F-3~~

F-4

Table of Contents

~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~

~~To the Board of Directors and Shareholders of~~

~~Berkshire Hills Bancorp, Inc.~~

In our opinion, the consolidated balance sheet as of December 31, 2016 and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for each of the two years in the period ended December 31, 2016 present fairly, in all material respects, the financial position of Berkshire Hills Bancorp, Inc. and its subsidiaries as of December 31, 2016, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

~~/s/ PricewaterhouseCoopers LLP~~

~~Boston, Massachusetts~~

~~March 1, 2017~~

~~F-4~~

~~Table of Contents~~

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS


	December 31,							December 31,
(In thousands, except share data)	2017			2016			(In thousands, except share data)	2022		2021
Assets							Assets
Cash and due from banks	$	91,122		$	71,494		Cash and due from banks	$	145,342	$	109,350
Short-term investments	157,641			41,581			Short-term investments	540,013		1,518,457
Total cash and cash equivalents	248,763			113,075			Total cash and cash equivalents	685,355		1,627,807

Trading security	12,277			13,229			Trading security	6,708		8,354
Marketable equity securities, at fair value							Marketable equity securities, at fair value	12,856		15,453
Securities available for sale, at fair value	1,426,099			1,209,537			Securities available for sale, at fair value	1,423,200		1,877,585
Securities held to maturity (fair values of 405,276 in 2017 and $337,680 in 2016)	397,103			334,368
Securities held to maturity (fair values of $507,464 in 2022 and $647,236 in 2021)							Securities held to maturity (fair values of $507,464 in 2022 and $647,236 in 2021)	583,453		636,503
Federal Home Loan Bank stock and other restricted securities	63,085			71,112			Federal Home Loan Bank stock and other restricted securities	7,219		10,800
Total securities	1,898,564			1,628,246			Total securities	2,033,436		2,548,695
Less: Allowance for credit losses on investment							Less: Allowance for credit losses on investment	(91)		(105)
Net Securities							Net Securities	2,033,345		2,548,590

Loans held for sale, at fair value	153,620			120,673
Loans held for sale							Loans held for sale	4,311		6,110

Commercial real estate	3,264,742			2,616,438
Commercial and industrial loans	1,803,939			1,062,038
Residential mortgages	2,102,807			1,893,131
Consumer loans	1,127,850			978,180

Total loans	8,299,338			6,549,787			Total loans	8,335,309		6,825,847
Less: Allowance for loan losses	(51,834		)	(43,998		)
Less: Allowance for credit losses on loans							Less: Allowance for credit losses on loans	(96,270)		(106,094)
Net loans	8,247,504			6,505,789			Net loans	8,239,039		6,719,753

Premises and equipment, net	109,352			93,215			Premises and equipment, net	85,217		94,383
Other real estate owned	—			151
Goodwill	519,287			403,106

Other intangible assets	38,296			19,445			Other intangible assets	24,483		29,619
Cash surrender value of bank-owned life insurance	191,221			139,257			Cash surrender value of bank-owned life insurance	238,919		235,690
Deferred tax assets, net	47,061			41,128

Other assets	117,083			98,457			Other assets	348,935		288,384
Assets held for sale							Assets held for sale	3,260		4,577

Total assets	$	11,570,751		$	9,162,542		Total assets	$	11,662,864	$	11,554,913

Liabilities							Liabilities
Demand deposits	$	1,667,323		$	1,278,875		Demand deposits	$	2,852,127	$	3,008,461
NOW deposits	673,891			570,583
NOW and other deposits							NOW and other deposits	1,054,596		976,401
Money market deposits	2,776,157			1,781,605			Money market deposits	3,723,570		3,293,526
Savings deposits	741,954			657,486			Savings deposits	1,063,269		1,111,625
Time deposits	2,890,205			2,333,543			Time deposits	1,633,707		1,678,940
Total deposits	8,749,530			6,622,092			Total deposits	10,327,269		10,068,953
Short-term debt	667,300			1,082,044

Long-term Federal Home Loan Bank advances	380,436			142,792			Long-term Federal Home Loan Bank advances	4,445		13,331
Subordinated notes	89,339			89,161			Subordinated notes	121,064		97,513
Total borrowings	1,137,075			1,313,997			Total borrowings	125,509		110,844
Other liabilities	187,882			133,155			Other liabilities	256,024		192,681

Total liabilities	10,074,487			8,069,244			Total liabilities	10,708,802		10,372,478

(continued)


								December 31,
(In thousands, except share data)							(In thousands, except share data)	2022		2021
Shareholders’ equity							Shareholders’ equity
Preferred Stock (Series B non-voting convertible preferred stock - $0.01 par value; 1,000,000 shares authorized, 521,607 shares issued and outstanding in 2017; 1,000,000 shares authorized, no shares issued and outstanding in 2016)	40,633			—
Common stock ($.01 par value; 50,000,000 shares authorized, 46,211,894 shares issued, and 45,290,433 shares outstanding in 2017; 50,000,000 shares authorized, 36,732,129 shares issued, and 35,672,817 shares outstanding in 2016)	460			366

Common stock ($0.01 par value; 100,000,000 shares authorized and 51,903,190 shares issued and 44,361,222 shares outstanding in 2022; 100,000,000 shares authorized; 51,903,190 shares issued, and 48,667,110 shares outstanding in 2021)							Common stock ($0.01 par value; 100,000,000 shares authorized and 51,903,190 shares issued and 44,361,222 shares outstanding in 2022; 100,000,000 shares authorized; 51,903,190 shares issued, and 48,667,110 shares outstanding in 2021)	$	528	$	528
Additional paid-in capital - common stock	1,242,487			898,989			Additional paid-in capital - common stock	1,424,183		1,423,445
Unearned compensation	(6,531		)	(6,374		)	Unearned compensation	(8,598)		(9,056)
Retained earnings	239,179			217,494
Accumulated other comprehensive income (loss)	4,161			9,766
Treasury stock, at cost (921,461 shares in 2017 and 1,059,312 shares in 2016)	(24,125		)	(26,943		)
Retained (deficit)							Retained (deficit)	(71,428)		(139,383)
Accumulated other comprehensive (loss)							Accumulated other comprehensive (loss)	(181,052)		(3,243)
Treasury stock, at cost (7,541,968 shares in 2022 and 3,236,080 shares in 2021)							Treasury stock, at cost (7,541,968 shares in 2022 and 3,236,080 shares in 2021)	(209,571)		(89,856)
Total shareholders’ equity	1,496,264			1,093,298			Total shareholders’ equity	954,062		1,182,435
Total liabilities and shareholders’ equity	$	11,570,751		$	9,162,542		Total liabilities and shareholders’ equity	$	11,662,864	$	11,554,913

The accompanying notes are an integral part of these consolidated financial statements.

F-5

Table of Contents

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF ~~INCOME~~OPERATIONS

Years Ended December 31,
(In thousands) 2017 2016 2015
Interest and dividend income

Loans $ 308,099
$ 242,600
$ 211,347
Securities and other 52,159
37,839
35,683
Total interest and dividend income 360,258
280,439
247,030
Interest expense

Deposits 43,855
30,883
22,948
Borrowings and subordinated notes 21,608
17,289
10,233
Total interest expense 65,463
48,172
33,181
Net interest income 294,795
232,267
213,849
Non-interest income

Mortgage banking income 54,251
7,555
4,133
Loan related income 21,401
16,694
8,310
Deposit related fees 27,165
24,963
25,084
Insurance commissions and fees 10,589
10,477
10,251
Wealth management fees 9,395
8,917
9,702
Total fee income 122,801
68,606
57,480
Other (3,377 ) (3,289 ) (5,302 )
Gain (Loss) on securities, net 12,598
(551 ) 2,110
Gain on sale of business operations, net 296
1,085
—
Loss on termination of hedges (6,629 ) —
—
Total non-interest income 125,689
65,851
54,288
Total net revenue 420,484
298,118
268,137
Provision for loan losses 21,025
17,362
16,726
Non-interest expense

Compensation and benefits 152,979
104,600
97,370
Occupancy and equipment 35,422
27,220
28,486
Technology and communications 25,900
19,883
16,881
Marketing and promotion 11,877
3,161
3,306
Professional services 9,165
6,199
5,172
FDIC premiums and assessments 6,457
5,066
4,649
Other real estate owned and foreclosures 44
691
833
Amortization of intangible assets 3,493
2,927
3,563
Merger, restructuring and conversion related expenses 31,558
15,461
17,611
Other 22,815
18,094
18,958
Total non-interest expense 299,710
203,302
196,829
Income from continuing operations before income taxes 99,749
77,454
54,582
Income tax expense 44,502
18,784
5,064
Net income $ 55,247
$ 58,670
$ 49,518
Preferred stock dividend 219
—
—
Income available to common shareholders $ 55,028
$ 58,670
$ 49,518

Earnings per common share:
Basic $ 1.40
$ 1.89
$ 1.74
Diluted $ 1.39
$ 1.88
$ 1.73
Weighted average common shares outstanding:

Basic 39,456
30,988
28,393
Diluted 39,695
31,167
28,564

~~The accompanying notes are an integral part of these consolidated financial statements.~~

~~F-6~~

~~Table of Contenets~~

~~BERKSHIRE HILLS BANCORP, INC.~~

~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME~~

Years Ended December 31,
(In thousands) 2017 2016 2015
Net income $ 55,247
$ 58,670
$ 49,518
Other comprehensive income (loss), before tax:

Changes in unrealized gains and losses on securities available-for-sale (15,142 ) 18,859
(9,677 )
Changes in unrealized gains and losses on derivative hedges 6,573
1,959
(5,232 )
Changes in unrealized gains and losses on pension (94 ) 515
(1,177 )
Total other comprehensive income (loss), before tax (8,663 ) 21,333
(16,086 )
Income taxes related to other comprehensive income (loss):

Changes in unrealized gains and losses on securities available-for-sale 5,610
(7,199 ) 3,640
Changes in unrealized gains and losses on derivative hedges (2,589 ) (835 ) 2,094
Changes in unrealized gains and losses on pension 37
(228 ) 468
Total income tax (expense) benefit related to other comprehensive income (loss) 3,058
(8,262 ) 6,202
Total other comprehensive income (loss) (5,605 ) 13,071
(9,884 )
Total comprehensive income $ 49,642
$ 71,741
$ 39,634


	Years Ended December 31,
(In thousands)	2022		2021		2020
Interest and dividend income
Loans	$	335,312	$	282,164	$	358,015
Securities and other	51,945		46,901		51,767
Total interest and dividend income	387,257		329,065		409,782
Interest expense
Deposits	33,437		27,236		72,715
Borrowings and subordinated notes	9,223		10,663		20,285
Total interest expense	42,660		37,899		93,000
Net interest income	344,597		291,166		316,782
Non-interest income
Deposit related fees	32,026		29,813		27,905
Loan fees and revenue	21,731		35,060		16,840
Insurance commissions and fees	—		7,003		10,770
Wealth management fees	10,008		10,530		9,285
Mortgage banking income	230		2,056		5,190
Total fee income	63,995		84,462		69,990
Other	6,973		6,631		2,597
(Loss) on securities, net	(2,031)		(787)		(7,520)
Gain on sale of business operations and assets, net	—		52,942		1,240

Total non-interest income	68,937		143,248		66,307
Total net revenue	413,534		434,414		383,089
Provision expense/(benefit) for credit losses	11,000		(500)		75,878
Non-interest expense
Compensation and benefits	152,741		150,589		147,840
Occupancy and equipment	37,638		41,782		43,359
Technology and communications	35,586		33,803		32,364
Marketing and promotion	5,103		2,749		3,703
Professional services	12,043		15,860		11,907
FDIC premiums and assessments	3,105		3,759		5,876
Other real estate owned and foreclosures	36		17		125
Amortization of intangible assets	5,134		5,200		6,181
Goodwill impairment	—		—		553,762
Merger, restructuring and conversion related expenses	8,909		5,781		5,839
Other	28,421		26,353		29,283
Total non-interest expense	288,716		285,893		840,239
Income/(loss) from continuing operations before income taxes	113,818		149,021		(533,028)
Income tax expense/(benefit) from continuing operations	21,285		30,357		(19,853)
Net income/(loss) from continuing operations	92,533		118,664		(513,175)

(Loss) from discontinued operations before income taxes	—		—		(26,855)
Income tax (benefit) from discontinued operations	—		—		(7,013)
Net (loss) from discontinued operations	—		—		(19,842)

Net income/(loss)	$	92,533	$	118,664	$	(533,017)
Preferred stock dividend	—		—		313
Income/(loss) available to common shareholders	$	92,533	$	118,664	$	(533,330)

	Years Ended December 31,
(in thousands, except per share data)	2022		2021		2020
Basic earnings/(loss) per share:
Continuing Operations	$	2.03	$	2.41	$	(10.21)
Discontinued operations	—		—		(0.39)
Total basic earnings/(loss) per share	$	2.03	$	2.41	$	(10.60)

Diluted earnings/(loss) per share:
Continuing Operations	$	2.02	$	2.39	$	(10.21)
Discontinued operations	—		—		(0.39)
Total diluted earnings/(loss) per share	$	2.02	$	2.39	$	(10.60)

Weighted average common shares outstanding:
Basic	45,564		49,240		50,270
Diluted	45,914		49,554		50,270

The accompanying notes are an integral part of these consolidated financial statements.

F-6

Table of Contenets

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME


	Years Ended December 31,
(In thousands)	2022		2021		2020
Net income/(loss)	$	92,533	$	118,664	$	(533,017)
Other comprehensive (loss)/income, before tax:
Changes in unrealized gains and losses on securities available-for-sale	(235,081)		(46,794)		25,726
Changes in unrealized gains and losses on cash flow hedges	(6,667)		—		—

Changes in unrealized gains and losses on pension	1,674		993		(489)
Total other comprehensive (loss)/income, before tax	(240,074)		(45,801)		25,237
Income taxes related to other comprehensive (loss)/income:
Changes in unrealized gains and losses on securities available-for-sale	60,922		11,937		(6,471)
Changes in unrealized gains and losses on cash flow hedges	1,789		—		—

Changes in unrealized gains and losses on pension	(446)		(250)		112
Total income tax benefit/(expense) related to other comprehensive income (loss)	62,265		11,687		(6,359)
Total other comprehensive (loss)/income	(177,809)		(34,114)		18,878
Total comprehensive (loss)/income	$	(85,276)	$	84,550	$	(514,139)

The accompanying notes are an integral part of these consolidated financial statements.

F-7

Table of Contents

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Preferred Stock Common Stock Additional paid-in Unearned Retained Accumulated other comprehensive Treasury
(In thousands, except per share data) Shares Amount Shares Amount capital compensation earnings (loss) income stock Total
Balance at January 1, 2015 —
—
25,183
$ 265
$ 585,289
$ (6,147 ) $ 156,446
$ 6,579
$ (33,145 ) $ 709,287
Comprehensive income:

Net income —
—
—
—
—
—
49,518
—
—
49,518
Other net comprehensive (loss) —
—
—
—
—
—
—
(9,884 ) —
(9,884 )
Total comprehensive income =sum(J5:J6)
=sum(J5:J6)
=sum(J5:J6)
=sum(J5:J6)
=sum(J5:J6)
=sum(J5:J6)
49,518
(9,884 ) —
39,634
Acquisition of Hampden Bancorp, Inc —
—
4,186
42
114,562
—
—
—
—
114,604
Acquisition of Firestone Financial —
—
1,442
15
42,092
—
—
—
—
42,107
Cash dividends declared on common shares ($0.76 per share) —
—
—
—
—
—
(21,903 ) —
—
(21,903 )
Treasury stock purchased —
—
(18 ) —
—
—
—
—
(550 ) (550 )
Forfeited shares —
—
(20 ) —
47
509
—
—
(556 ) —
Exercise of stock options —
—
16
—
—
—
(176 ) —
415
239
Restricted stock grants —
—
226
—
440
(6,029 ) —
—
5,589
—
Stock-based compensation —
—
—
—
—
4,670
—
—
—
4,670
Net tax benefit related to stock-based compensation —
—
—
—
167
—
—
—
—
167
Other, net —
—
(41 ) —
22
—
—
—
(1,088 ) (1,066 )
Balance at December 31, 2015 —
—
30,974
$ 322
$ 742,619
$ (6,997 ) $ 183,885
$ (3,305 ) $ (29,335 ) $ 887,189
Comprehensive income: 0

Net income —
—
—
—
—
—
58,670
—
—
58,670
Other net comprehensive income —
—
—
—
—
—
—
13,071
—
13,071
Total comprehensive income —
—
—
—
—
—
58,670
13,071
—
71,741
Acquisition of 44 Business Capital —
—
45
—
—
—
—
—
1,217
1,217
Acquisition of First Choice Bank —
—
4,410
44
151,004
—
—
—
—
151,048
Cash dividends declared on common shares ($0.80 per share) —
—
—
—
—
—
(24,916 ) —
—
(24,916 )
Treasury stock adjustment (1) —
—
—
—
4,632
—
—
—
(4,632 ) —
Forfeited shares —
—
(70 ) —
148
1,789
—
—
(1,937 ) —
Exercise of stock options —
—
151
—
—
—
(145 ) —
3,857
3,712
Restricted stock grants —
—
211
—
575
(5,787 ) —
—
5,212
—
Stock-based compensation —
—
—
—
—
4,621
—
—
—
4,621
Net tax benefit related to stock-based compensation —
—
—
—
(1 ) —
—
—
—
(1 )
Other, net —
—
(48 ) —
12
—
—
—
(1,325 ) (1,313 )
Balance at December 31, 2016 —
—
35,673
$ 366
$ 898,989
$ (6,374 ) $ 217,494
$ 9,766
$ (26,943 ) $ 1,093,298
Comprehensive income:

Net income —
—
—
—
—
—
55,247
—
—
55,247
Other net comprehensive (loss) —
—
—
—
—
—
—
(5,605 ) —
(5,605 )
Total comprehensive income —
—
—
—
—
—
55,247
(5,605 ) —
49,642
Acquisition of Commerce Bank 522
40,633
4,842
48
188,552
—
—
—
—
229,233
Common stock issued, net of $7.1 million offering costs —
—
4,638
46
152,938
—
—
—
—
152,984
Cash dividends declared on common shares ($0.84 per share) —
—
—
—
—
—
(33,022 ) —
—
(33,022 )
Cash dividends declared on preferred shares ($0.42 per share) —
—
—
—
—
—
(219 ) —
—
(219 )
Forfeited shares —
—
(17 ) —
102
516
—
—
(618 ) —
Exercise of stock options —
—
19
—
—
—
(158 ) —
487
329
Restricted stock grants —
—
161
—
1,650
(5,775 ) —
—
4,125
—
Stock-based compensation —
—
—
—
—
5,102
—
—
—
5,102
Other, net —
—
(26 ) —
256
—
(163 ) —
(1,176 ) (1,083 )
Balance at December 31, 2017 522
40,633
45,290
$ 460
$ 1,242,487
$ (6,531 ) $ 239,179
$ 4,161
$ (24,125 ) $ 1,496,264

~~(1)Treasury stock adjustment represents the extinguishment of 168,931 shares of Berkshire Hills Bancorp stock held by the Company's subsidiary.~~


	Preferred Stock			Common Stock			Additional paid-in		Unearned		Retained (deficit)		Accumulated other comprehensive		Treasury
(In thousands, except per share data)	Shares	Amount		Shares	Amount		capital		compensation		earnings		(loss) income		stock		Total
Balance at January 1, 2020	522	$	40,633	49,585	$	517	$	1,422,441	$	(8,465)	$	361,082	$	11,993	$	(69,637)	$	1,758,564

Comprehensive (loss):
Net (loss)	—	—		—	—		—		—		(533,017)		—		—		(533,017)
Other net comprehensive income	—	—		—	—		—		—		—		18,878		—		18,878
Total comprehensive income	—	—		—	—		—		—		(533,017)		18,878		—		(514,139)
Impact of ASC 326 Adoption	—	—		—	—		—		—		(24,380)		—		—		(24,380)
Conversion of preferred stock to common stock	(522)	(40,633)		1,043	11		10,395		—		—		—		30,227		—
Cash dividends declared on common shares ($0.72 per share)	—	—		—	—		—		—		(36,251)		—		—		(36,251)
Cash dividends declared on preferred shares ($1.20 per share)	—	—		—	—		—		—		(313)		—		—		(313)
Treasury stock purchased	—	—		(14)	—		—		—		—		—		(473)		(473)
Forfeited shares	—	—		(91)	—		(1,570)		2,727		—		—		(1,157)		—
Exercise of stock options	—	—		37	—		—		—		(465)		—		1,129		664
Restricted stock grants	—	—		314	—		(4,121)		(5,234)		—		—		9,355		—
Stock-based compensation	—	—		—	—		—		4,727		—		—		—		4,727

Other, net	—	—		(41)	—		94		—		—		—		(720)		(626)
Balance at December 31, 2020	—	$	—	50,833	$	528	$	1,427,239	$	(6,245)	$	(233,344)	$	30,871	$	(31,276)	$	1,187,773

Comprehensive income:		0
Net income	—	—		—	—		—		—		118,664		—		—		118,664
Other net comprehensive (loss)	—	—		—	—		—		—		—		(34,114)		—		(34,114)
Total comprehensive income	—	—		—	—		—		—		118,664		(34,114)		—		84,550
Cash dividends declared on common shares ($0.48 per share)	—	—		—	—		—		—		(24,553)		—		—		(24,553)

Treasury stock purchased	—	—		(2,500)	—		—		—		—		—		(68,712)		(68,712)
Forfeited shares	—	—		(113)	—		90		2,644		—		—		(2,734)		—
Exercise of stock options	—	—		20	—		—		—		(150)		—		567		417
Restricted stock grants	—	—		476	—		(3,898)		(9,625)		—		—		13,523		—
Stock-based compensation	—	—		—	—		—		4,170		—		—		—		4,170
Other, net	—	—		(49)	—		14		—		—		—		(1,224)		(1,210)
Balance at December 31, 2021	—	$	—	48,667	$	528	$	1,423,445	$	(9,056)	$	(139,383)	$	(3,243)	$	(89,856)	$	1,182,435

Comprehensive income:
Net income	—	—		—	—		—		—		92,533		—		—		92,533
Other net comprehensive (loss)	—	—		—	—		—		—		—		(177,809)		—		(177,809)
Total comprehensive income	—	—		—	—		—		—		92,533		(177,809)		—		(85,276)


Cash dividends declared common shares ($0.54 per share)	—	—		—	—		—		—		(24,527)		—		—		(24,527)

Treasury stock purchased	—	—		(4,485)	—		—		—		—		—		(124,519)		(124,519)
Forfeited shares	—	—		(98)	—		189		2,560		—		—		(2,749)		—
Exercise of stock options	—	—		12	—		—		—		(51)		—		321		270
Restricted stock grants	—	—		328	—		537		(9,440)		—		—		8,903		—
Stock-based compensation	—	—		—	—		—		7,338		—		—		—		7,338
Other, net	—	—		(63)	—		12		—		—		—		(1,671)		(1,659)
Balance at December 31, 2022	—	$	—	44,361	$	528	$	1,424,183	$	(8,598)	$	(71,428)	$	(181,052)	$	(209,571)	$	954,062

The accompanying notes are an integral part of these consolidated financial statements.

F-8

Table of Contents

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(In thousands)	2022		2021		2020
Cash flows from operating activities:
Net income/(loss) from continuing operations	$	92,533	$	118,664	$	(513,175)
Net (loss) from discontinued operations	—		—		(19,842)
Net income/(loss)	$	92,533	$	118,664	$	(533,017)
Adjustments to reconcile net income to net cash provided by operating activities:
Provision expense/(benefit) for credit losses	11,000		(500)		75,878
Net amortization of securities	2,886		1,939		2,513
Change in unamortized net loan origination costs and premiums	3,312		(1,918)		21,856
Premises and equipment depreciation and amortization expense	9,576		11,035		11,919
Stock-based compensation expense	7,338		4,170		4,727
Accretion of purchase accounting entries, net	(1,637)		(6,577)		(10,377)
Amortization of other intangibles	5,134		5,200		6,181

Income from cash surrender value of bank-owned life insurance policies	(5,540)		(5,561)		(5,354)
Securities losses/(gains), net	2,031		787		7,576
Net change in loans held-for-sale	5,168		5,775		(4,267)


Loss on disposition of assets	—		2,811		327
Loss on sale of real estate	—		6		13
Amortization of interest in tax-advantaged projects	3,508		3,444		3,645

Goodwill impairment	—		—		553,762
Gain on sale of business operations and other assets	—		(52,942)		—
Prepayment penalties on repayment of Federal Home Loan Bank advances	—		862		—
Net change in other	(12,076)		18,282		(31,247)
Net cash provided by operating activities of continuing operations	123,233		105,477		123,977
Net cash provided/(used) by operating activities of discontinued operations	—		—		103,664
Net cash provided by operating activities	$	123,233	$	105,477	$	227,641

Cash flows from investing activities:
Net decrease in trading security	818		776		734
Purchases of marketable equity securities	—		—		(17,631)
Proceeds from sales of marketable equity securities	—		2,880		33,928
Purchases of securities available for sale	(478,940)		(804,616)		(885,182)
Proceeds from sales of securities available for sale	149,994		—		69,337
Proceeds from maturities, calls, and prepayments of securities available for sale	548,423		575,538		457,586
Purchases of securities held to maturity	(807)		(219,470)		(144,651)
Proceeds from maturities, calls, and prepayments of securities held to maturity	51,961		46,061		35,331
Net change in loans	(1,559,012)		1,262,521		1,054,029
Net change in Mid-Atlantic region loans held for sale	—		50,914		—

Proceeds from surrender of bank-owned life insurance	2,311		2,566		553

Purchase of Federal Home Loan Bank stock	(124,331)		—		(6,741)
Proceeds from sales of Federal Home Loan Bank stock	127,912		24,078		19,887
Net investment in limited partnership tax credits	(14,537)		(2,878)		(7,280)
Purchase of premises and equipment, net	(1,495)		(1,606)		(7,208)
(Continued)

Years Ended December 31,
(In thousands) 2017 2016 2015
Cash flows from operating activities:

Net income $ 55,247
$ 58,670
$ 49,518
Adjustments to reconcile net income to net cash provided by operating activities:

Provision for loan losses 21,025
17,362
16,726
Net amortization of securities 1,678
4,052
3,010
Net change in unamortized loan origination costs and premium 2,232
(4,138 ) (961 )
Premises and equipment depreciation and amortization expense 9,916
8,393
8,594
Stock-based compensation expense 5,102
4,621
4,686
Accretion of purchase accounting entries, net (18,189 ) (9,407 ) (10,074 )
Amortization of other intangibles 3,493
2,927
3,563
Write down of other real estate owned 10
395
480
Excess tax loss from stock-based payment arrangements —
(105 ) (167 )
Income from cash surrender value of bank-owned life insurance policies (3,615 ) (3,913 ) (3,356 )
(Loss) gain on sales of securities, net (12,598 ) 551
(2,110 )
Net (increase) decrease in loans held for sale (32,947 ) 5,185
(3,212 )
Loss on disposition of assets 912
1,318
3,514
(Gain) loss on sale of real estate (51 ) 40
191
Amortization of tax credits 8,477
8,882
11,428
Remeasurement of deferred tax asset 18,145
—
—
Net change in other 19,254
3,309
4,458
Net cash provided by operating activities 78,091
98,142
86,288

Cash flows from investing activities:

Net decrease in trading security 632
599
570
Proceeds from sales of securities available for sale 188,921
421,843
41,169
Proceeds from maturities, calls and prepayments of securities available for sale 206,648
166,736
184,753
Purchases of securities available for sale (498,646 ) (400,053 ) (285,637 )
Proceeds from maturities, calls and prepayments of securities held to maturity 12,600
7,734
8,534
Purchases of securities held to maturity (77,208 ) (7,115 ) (62,274 )
Net change in loans (468,331 ) (334,347 ) (388,091 )
Acquisitions, net of cash paid 374,611
(48,180 ) 74,324
Net cash used for branch sale —
—
(11,715 )
Proceeds from surrender of bank-owned life insurance 310
258
554
Purchase of bank-owned life insurance (20,000 ) —
—
Proceeds from sale of Federal Home Loan Bank stock 96,378
19,461
2,357
Purchase of Federal Home Loan Bank stock (88,351 ) (19,555 ) (10,706 )
Proceeds from premises and equipment —
226
2,261
Purchase of premises and equipment, net (12,528 ) (9,101 ) (7,340 )
Net investment in limited partnership tax credits (5,102 ) (7,616 ) (5,105 )
Payment to terminate cash flow hedges 6,573
—
—
Proceeds from sale of other real estate 590
1,515
1,854
Net cash used in investing activities (282,903 ) (207,595 ) (454,492 )

~~(continued)~~

F-9

Table of Contents

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONCLUDED)


	Years ended December 31,										Years ended��December 31,
(In thousands)	2017			2016			2015			(In thousands)	2022		2021		2020
Proceeds from sales of seasoned commercial loan portfolios										Proceeds from sales of seasoned commercial loan portfolios	24,323		16,417		37,988

Proceeds from sales of other real estate owned										Proceeds from sales of other real estate owned	—		187		171
Cash outflows from sale of business operations and other assets										Cash outflows from sale of business operations and other assets	—		(352,814)		—
Net investing cash flows provided/(used) by discontinued operations										Net investing cash flows provided/(used) by discontinued operations	—		—		252
Net cash (used)/provided by investing activities										Net cash (used)/provided by investing activities	$	(1,273,380)	$	600,554	$	641,103

Cash flows from financing activities:										Cash flows from financing activities:
Net increase in deposits	$	418,550		$	140,730		$	475,823		Net increase in deposits	$	258,316	$	(154,052)	$	499,657
Net change in Mid-Atlantic region deposits held for sale										Net change in Mid-Atlantic region deposits held for sale	—		20,953		—
Proceeds from Federal Home Loan Bank advances and other borrowings	5,978,358			9,364,599			8,566,300			Proceeds from Federal Home Loan Bank advances and other borrowings	51,275		—		326,277
Repayments of Federal Home Loan Bank advances and other borrowings	(6,174,781		)	(9,365,159		)	(8,620,064		)	Repayments of Federal Home Loan Bank advances and other borrowings	(60,196)		(462,059)		(582,648)
Issuance of common stock, net of $7.1 million offering costs	152,985			—			—

Proceeds from issuance of subordinated debt										Proceeds from issuance of subordinated debt	98,032		—		—
Repayment from calling of subordinated debt										Repayment from calling of subordinated debt	(75,000)		—		—
Purchase of treasury stock	—			—			(550		)	Purchase of treasury stock	(124,519)		(68,712)		(473)
Exercise of stock options	329			3,712			239			Exercise of stock options	270		417		664
Excess tax loss from stock-based payment arrangements	—			—			167
Cash dividends paid	(33,241		)	(24,916		)	(21,903		)
Acquisition contingent consideration paid	(1,700		)	—			—
Net cash provided by financing activities	340,500			118,966			400,012
Common and preferred stock cash dividends paid										Common and preferred stock cash dividends paid	(24,527)		(24,553)		(36,564)
Settlement of derivative contracts with financial institution counterparties										Settlement of derivative contracts with financial institution counterparties	84,044		51,907		(97,611)

Net cash provided/(used) by financing activities										Net cash provided/(used) by financing activities	$	207,695	$	(636,099)	$	109,302

Net change in cash and cash equivalents	135,688			9,513			31,808			Net change in cash and cash equivalents	(942,452)		69,932		978,046

Cash and cash equivalents at beginning of year	113,075			103,562			71,754			Cash and cash equivalents at beginning of year	1,627,807		1,557,875		579,829

Cash and cash equivalents at end of year	$	248,763		$	113,075		$	103,562		Cash and cash equivalents at end of year	685,355		1,627,807		1,557,875

Supplemental cash flow information:										Supplemental cash flow information:
Interest paid on deposits	$	43,133		$	28,777		$	22,130		Interest paid on deposits	$	32,782	$	29,606	$	82,319
Interest paid on borrowed funds	21,336			16,674			9,974			Interest paid on borrowed funds	9,043		11,385		21,277
Income taxes paid, net	18,323			16,229			429
Income taxes (refunded)/paid, net										Income taxes (refunded)/paid, net	28,439		14,816		(13,864)

Acquisition of non-cash assets and liabilities:
Assets acquired	1,584,786			1,169,086			948,796
Liabilities assumed	(1,959,489		)	(965,529		)	(762,261		)


Other non-cash changes:										Other non-cash changes:
Other net comprehensive (loss) income	(5,605		)	13,071			(9,884		)
Other net comprehensive (loss)/income										Other net comprehensive (loss)/income	$	(177,809)	$	(34,114)	$	18,878
Impact to retained earnings from adoption of ASC 326, net of tax										Impact to retained earnings from adoption of ASC 326, net of tax	—		—		24,380
Mid-Atlantic assets reclassified to held for sale										Mid-Atlantic assets reclassified to held for sale	—		—		317,304
Mid-Atlantic liabilities reclassified to held for sale										Mid-Atlantic liabilities reclassified to held for sale	—		—		630,065
Mid-Atlantic loans held-for-sale reclassified to portfolio loans, net										Mid-Atlantic loans held-for-sale reclassified to portfolio loans, net	—		29,418		—
Mid-Atlantic deposits held-for-sale reclassified to deposits, net										Mid-Atlantic deposits held-for-sale reclassified to deposits, net	—		7,197		—
Seasoned loan portfolios reclassified to held-for-sale, net										Seasoned loan portfolios reclassified to held-for-sale, net	3,369		11,660		14,845
Held-for-sale loans reclassified to held-for-investment, net										Held-for-sale loans reclassified to held-for-investment, net	606		—		—
Premises and equipment reclassified to held-for-sale										Premises and equipment reclassified to held-for-sale	1,380		4,577		—
Real estate owned acquired in settlement of loans	490			340			2,085			Real estate owned acquired in settlement of loans	—		—		224
Premium payable on cash flow hedges										Premium payable on cash flow hedges	2,296		—		—



Delaware						04-3510455
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)



ITEM 14.			PRINCIPAL ACCOUNTING FEES AND SERVICES	78

PART IV				79

ITEM 15.			EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	79

ITEM 16.			FORM 10-K SUMMARY	81

SIGNATURES				82


TABLE INDEX

PART I				4

ITEM 1.				4

		ITEM 1 TABLE 1 — LOAN PORTFOLIO ANALYSIS		95

		ITEM 1 TABLE 2 — MATURITY AND SENSITIVITY OF LOAN PORTFOLIO		128

		ITEM 1 TABLE 3 — ~~PROBLEM ASSETS AND ACCRUING TDR~~CREDIT QUALITY RATIOS		1411

		ITEM 1 TABLE 4 ~~— ALLOWANCE FOR LOAN LOSS~~		15

	~~ITEM 1 TABLE 5~~ — ALLOCATION OF ALLOWANCE BY LOAN CATEGORY	1612

		ITEM 1 TABLE ~~6 — AMORTIZED COST AND FAIR VALUE OF SECURITIES~~		17

	~~ITEM 1 TABLE 7~~5 — WEIGHTED AVERAGE YIELD ON SECURITIES	1813

		ITEM 1 TABLE 86 — AVERAGE BALANCE AND WEIGHTED AVERAGE RATES FOR DEPOSITS		1814

		ITEM 1 TABLE 97 — MATURITY OF DEPOSITS > ~~$100,000~~$250,000		1915

PART II				3840

~~ITEM 6~~ITEMS 7-7A.				4042

		ITEM 67 TABLE 31 — AVERAGE BALANCES, INTEREST AND AVERAGE YIELD COSTS		4245

		ITEM 67 TABLE 42 — RATE VOLUME ANALYSIS		4446

~~ITEMS 7~~-7A.		45

	ITEM 7 — 7A TABLE ~~1 — CONTRACTUAL OBLIGATIONS~~	65

	~~ITEM 7 — 7A TABLE 2~~3 — QUALITATIVE ASPECTS OF MARKET RISK	70



Contractual Maturity	One Year		One to		More Than
(In thousands)	or Less		Five Years		Five Years		Total
Construction real estate loans:
Commercial	$	59,909	$	206,427	$	—	$	266,336
Residential	2,717		124		2,569		5,410
Commercial and industrial loans	307,577		918,136		578,226		1,803,939
Total	$	370,203	$	1,124,687	$	580,795	$	2,075,685


Contractual Maturity	One Year		One to		Five to		More Than
(In thousands)	or Less		Five Years		Fifteen Years		Fifteen Years		Total
Loans:
Construction	$	12,852	$	233,495	$	64,985	$	8,120	$	319,452
Commercial multifamily	18,565		206,013		393,341		2,169		620,088
Commercial real estate owner occupied	27,964		177,362		353,804		81,359		640,489
Commercial real estate non-owner occupied	280,368		1,280,002		889,709		46,158		2,496,237
Commercial and industrial	236,565		948,245		246,527		13,899		1,445,236

Residential real estate	2,329		32,703		231,302		2,046,113		2,312,447
Home equity	428		2,333		71,894		152,795		227,450
Consumer other	7,962		208,030		43,577		14,341		273,910
Total	$	587,033	$	3,088,183	$	2,295,139	$	2,364,954	$	8,335,309



PART I		4

ITEM 1.	BUSINESS	4

ITEM 1A.	RISK FACTORS	29

ITEM 1B.	UNRESOLVED STAFF COMMENTS	3638

ITEM 2.	PROPERTIES	3638

ITEM 3.	LEGAL PROCEEDINGS	3739

ITEM 4.	MINE SAFETY DISCLOSURES	3739

PART II		3840

ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	3840

ITEM 6.	[~~SELECTED FINANCIAL DATA~~RESERVED]	4041

ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	4542

ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	69

ITEM 8.	CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	7271

ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	7371

ITEM 9A.	CONTROLS AND PROCEDURES	7371

ITEM 9B.	OTHER INFORMATION	7471

ITEM 9C.	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS	71

PART III		7572

ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE	7573

ITEM 11.	EXECUTIVE COMPENSATION	77

ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS	7877


ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	78



2017	High		Low		Dividends Declared
First quarter	$	37.45	$	32.90	$	0.21
Second quarter	38.65		33.55		0.21
Third quarter	39.00		32.85		0.21
Fourth quarter	40.00		35.10		0.21



2016
First quarter	$	28.93	$	24.71	$	0.20
Second quarter	28.18		24.80		0.20
Third quarter	28.37		25.90		0.20
Fourth quarter	37.35		27.25		0.20



	Period Ending
Index	12/31/12	12/31/13	12/31/14	12/31/15	12/31/16	12/31/17
Berkshire Hills Bancorp, Inc.	100.00	117.53	118.35	132.76	173.10	175.94
NYSE Composite Index	100.00	126.06	134.62	129.40	144.72	171.66
PHLX KBW Regional Banking Index	100.00	146.30	149.67	158.62	219.27	223.02



	2017 Compared with 2016							2016 Compared with 2015
	(Decrease) Increase Due to							(Decrease) Increase Due to
(In thousands)	Rate			Volume		Net		Rate			Volume			Net
Interest income:
Commercial real estate	$	9,145		$	25,080	$	34,225	$	(591	)	$	15,335		$	14,744
Commercial and industrial loans	1,999			12,457		14,456		5,294			4,120			9,414
Residential loans	(259		)	5,595		5,336		(3,427		)	6,920			3,493
Consumer loans	3,698			5,839		9,537		1,416			2,379			3,795
Total loans	14,583			48,971		63,554		2,692			28,754			31,446
Investment securities	1,985			16,978		18,963		3,667			(1,238		)	2,429
Short-term investments and loans held for sale	1,405			2,271		3,676		324			(132		)	192
Total interest income	$	17,973		$	68,220	$	86,193	$	6,683		$	27,384		$	34,067

Interest expense:
NOW accounts	$	627		$	165	$	792	$	(39	)	$	35		$	(4	)
Money market accounts	1,698			2,506		4,204		1,000			109			1,109
Savings accounts	122			88		210		(212		)	42			(170		)
Certificates of deposit	2,205			5,561		7,766		2,861			4,140			7,001
Total deposits	4,652			8,320		12,972		3,610			4,326			7,936
Borrowings	1,981			2,338		4,319		7,008			48			7,056
Total interest expense	$	6,633		$	10,658	$	17,291	$	10,618		$	4,374		$	14,992
Change in net interest income	$	11,340		$	57,562	$	68,902	$	(3,935	)	$	23,010		$	19,075



	At or For the Years Ended
(Dollars in thousands)	December 31, 2017			December 31, 2016			December 31, 2015
GAAP Net income	$	55,247		$	58,670		$	49,518
Non-GAAP measures
Adj: Gain on sale of securities, net	(12,598		)	551			(2,110		)
Adj: Net gains on sale of business operations	(296		)	(1,085		)	—
Adj: Loss on termination of hedges	6,629			—			—
Adj: Acquisition, restructuring, conversion, and other related expenses (1)	31,558			15,761			17,611
Adj: Employee and Community Investment	3,400			—			—
Adj: Deferred tax asset impairment	18,145			—			—
Adj: Income taxes	(11,277		)	(5,455		)	(5,409		)
Net non-operating charges	35,561			9,772			10,092
Total adjusted net income (non-GAAP)	$	90,808		$	68,442		$	59,610
GAAP Total revenue	$	420,484		$	298,118		$	268,137
Adj: Gain on sale of securities, net	(12,598		)	551			(2,110		)
Adj: Net gains on sale of business operations	(296		)	(1,085		)	—
Adj: Loss on termination of hedges	6,629			—			—
Total adjusted operating revenue (non-GAAP)	$	414,219		$	297,584		$	266,027
GAAP Total non-interest expense	$	299,710		$	203,302		$	196,830
Less: Total non-operating expense (see above)	(31,558		)	(15,761		)	(17,611		)
Less: Employee and Community Reinvestment	(3,400		)	—			—
Adjusted operating non-interest expense (non-GAAP)	$	264,752		$	187,541		$	179,219
(in millions, except per share data)
Total average assets	$	9,815		$	7,958		$	7,249
Total average shareholders' equity	1,244			911			805
Total average tangible shareholders equity	793			563			494
Total average tangible common shareholders equity	784			563			494
Total tangible shareholders’ equity, period-end	939			671			553
Total tangible common shareholders’ equity, period-end	898			671			553
Total tangible assets, period-end	11,013			8,740			7,496
Total common shares outstanding, period-end (thousands)	45,290			35,673			30,974
Average diluted shares outstanding (thousands)	39,695			31,167			28,564
Earnings per share, diluted	$	1.39		$	1.88		$	1.73
Plus: Net adjustments per share, diluted	0.90			0.32			0.36
Adjusted earnings per share, diluted	2.29			2.20			2.09
Book value per common share, period-end	32.14			30.65			28.64
Tangible book value per common share, period-end	19.83			18.81			17.84
Total shareholders' equity/total assets	12.93			11.93			11.33
Total tangible shareholders' equity/total tangible assets	8.52			7.68			7.37
Average operating diluted shares outstanding (thousands)	39,695			31,167			28,564
Performance Ratios
GAAP return on assets	0.56			0.74			0.68
Adjusted return on assets	0.93			0.86			0.82
GAAP return on equity	4.45			6.44			6.15
Adjusted return on equity	7.31			7.51			7.40
Adjusted return on tangible common equity	11.82			12.47			12.49
Efficiency ratio	59.97			58.27			60.88
Supplementary Data (in thousands)
Tax benefit on tax-credit investments	10,182			11,134			16,127
Non-interest income charge on tax-credit investments	(8,693		)	(8,993		)	(11,406		)
Net income on tax-credit investments	1,489			2,143			4,721
Intangible amortization	3,493			2,927			3,563
Fully taxable equivalent income adjustment	11,227			8,098			6,354



(In thousands)	Total		Less than One Year		One to Three Years		Three to Five Years		After Five Years
FHLBB borrowings (1)	$	1,047,736	$	836,115	$	204,183	$	7,438	$	—
Subordinated notes	89,339		—		—		—		89,339
Operating lease obligations (2)	96,356		12,830		20,080		15,859		47,587
Purchase obligations (3)	102,002		16,321		31,086		27,507		27,088
Total Contractual Obligations	$	1,335,433	$	865,266	$	255,349	$	50,804	$	164,014



Change in Interest Rates-Basis Points (Rate Ramp)
	1- 12 Months					13- 24 Months
	$ Change			% Change		$ Change			% Change
(In thousands)
At December 31, 2017
+300	$	9,806		2.95	%	$	11,193		3.40	%
+200	7,940			2.39		9,374			2.85
+100	4,683			1.41		5,890			1.79
-100	(6,424		)	(1.93	)	(12,532		)	(3.81	)

At December 31, 2016
+300	$	9,904		3.96	%	$	7,659		3.07	%
+200	7,497			3.00		6,527			2.62
+100	4,632			1.85		4,448			1.78
-100	(5,853		)	(2.34	)	(10,100		)	(4.05	)


~~��~~	~~ASU No. 2016-07, Simplifying the Transition to the Equity Method of Accounting~~



				Fair Value				As Recorded by
(in thousands)	As Acquired			Adjustments				the Company
Consideration Paid:
Company common stock issued to Commerce common shareholders								$	188,599
Company preferred stock issued to certain Commerce shareholders								40,633
Cash in lieu paid to Commerce shareholders								1
Total consideration paid								$	229,233
Recognized amounts of identifiable assets acquired and (liabilities) assumed, at fair value:
Cash and short-term investments	$	374,611		$	—			$	374,611
Investment securities	115,274			(1,427		)	(a)	113,847
Loans, net	1,327,256			(86,505		)	(b)	1,240,751
Premises and equipment	8,931			5,346			(c)	14,277
Core deposit intangibles	—			22,400			(d)	22,400
Deferred tax assets, net	7,956			26,580			(e)	34,536
Goodwill and other intangibles	11,233			(11,233		)	(f)	—
Other assets	52,709			(3,664		)	(g)	49,045
Deposits	(1,710,872		)	(1,180		)	(h)	(1,712,052		)
Borrowings	(19,542		)	—				(19,542		)
Other liabilities	(5,086		)	265				(4,821		)
Total identifiable net assets	$	162,470		$	(49,418	)		$	113,052

Goodwill								$	116,181


~~(a)~~	~~The adjustment represents the write down of the book value of securities to their estimated fair value at the date of acquisition.~~


~~(d)~~	The adjustment represents the value of the core deposit base assumed in the acquisition. The core deposit asset was recorded as an identifiable intangible asset and will be amortized over the estimated useful life of the deposit base (10 years).


~~(e)~~	~~Represents net deferred tax assets resulting from the fair value adjustments related to the acquired assets and liabilities, identifiable intangibles, and other purchase accounting adjustments.~~


~~(f)~~	~~Represents the write-off of goodwill and intangible assets from a prior Commerce acquisition.~~


~~(g)~~	~~The adjustment includes a $3.5 million write-down of repossessed assets based on market report data.~~


~~(h)~~	The adjustment is necessary because the weighted average interest rate of time deposits exceeded the cost of similar funding at the time of acquisition. The amount will be amortized over the estimated useful life of nine months.



	ASC 310-30 Loans
Gross contractual receivable amounts at acquisition	$	163,125
Contractual cash flows not expected to be collected (nonaccretable discount)	(81,205		)
Expected cash flows at acquisition	81,920
Interest component of expected cash flows (accretable discount)	(10,815		)
Fair value of acquired loans	$	71,105



	Pro Forma (unaudited) Years ended December 31,
	2017		2016
Net interest income	$	344,797	$	302,012
Non-interest income	134,818		77,192
Income available to common shareholders	77,340		78,859


(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Allowance
December 31, 2022
Securities available for sale
Debt securities:
U.S Treasuries	$	11,972	$	1	$	—	$	11,973	$	—
Municipal bonds and obligations	65,943		422		(3,030)		63,335		—
Agency collateralized mortgage obligations	631,732		—		(99,787)		531,945		—
Agency mortgage-backed securities	643,308		1		(96,996)		546,313		—
Agency commercial mortgage-backed securities	264,218		—		(35,750)		228,468		—
Corporate bonds	43,368		80		(2,938)		40,510		—

Other bonds and obligations	655		67		(66)		656		—
Total securities available for sale	1,661,196		571		(238,567)		1,423,200		—
Securities held to maturity
Municipal bonds and obligations	266,793		691		(23,704)		243,780		66
Agency collateralized mortgage obligations	128,136		—		(20,420)		107,716		—
Agency mortgage-backed securities	50,958		—		(9,240)		41,718		—
Agency commercial mortgage-backed securities	135,206		—		(23,203)		112,003		—
Tax advantaged economic development bonds	2,069		8		(121)		1,956		25
Other bonds and obligations	291		—		—		291		—
Total securities held to maturity	583,453		699		(76,688)		507,464		91

Marketable equity securities	15,035		—		(2,179)		12,856		—
Total	$	2,259,684	$	1,270	$	(317,434)	$	1,943,520	$	91

December 31, 2021
Securities available for sale
Debt securities:
U.S Treasuries	$	59,972	$	1	$	—	$	59,973	$	—
Municipal bonds and obligations	71,822		5,355		—		77,177		—
Agency collateralized mortgage obligations	693,782		5,566		(11,012)		688,336		—
Agency mortgage-backed securities	711,154		2,347		(7,642)		705,859		—
Agency commercial mortgage-backed securities	300,259		3,949		(3,628)		300,580		—
Corporate bonds	44,824		950		(114)		45,660		—

Other bonds and obligations	—		—		—		—		—
Total securities available for sale	1,881,813		18,168		(22,396)		1,877,585		—
Securities held to maturity
Municipal bonds and obligations	281,515		16,151		(693)		296,973		70
Agency collateralized mortgage-backed securities	149,195		3,203		(3,513)		148,885		—
Agency mortgage-backed securities	57,327		95		(1,498)		55,924		—
Agency commercial mortgage-backed securities	145,573		266		(3,289)		142,550		—
Tax advantaged economic development bonds	2,728		26		(15)		2,739		35
Other bonds and obligations	165		—		—		165		—
Total securities held to maturity	636,503		19,741		(9,008)		647,236		105

Marketable equity securities	15,689		67		(303)		15,453		—
Total	$	2,534,005	$	37,976	$	(31,707)	$	2,540,274	$	105


	Available for sale				Held to maturity					Available for sale				Held to maturity
(In thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		(In thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within 1 year	$	622	$	623	$	1,261	$	1,261	Within 1 year	$	12,482	$	12,482	$	995	$	995
Over 1 year to 5 years	32,659		32,972		25,892		26,422		Over 1 year to 5 years	11,254		11,269		2,191		2,181
Over 5 years to 10 years	75,261		76,745		8,752		8,917		Over 5 years to 10 years	49,729		46,904		28,544		28,543
Over 10 years	136,052		140,171		269,083		276,434		Over 10 years	48,473		45,819		237,423		214,308
Total bonds and obligations	244,594		250,511		304,988		313,034		Total bonds and obligations	121,938		116,474		269,153		246,027

Marketable equity securities	36,483		45,185		—		—
Mortgage-backed securities	1,142,656		1,130,403		92,115		92,242		Mortgage-backed securities	1,539,258		1,306,726		314,300		261,437
Total	$	1,423,733	$	1,426,099	$	397,103	$	405,276	Total	$	1,661,196	$	1,423,200	$	583,453	$	507,464


	Less Than Twelve Months				Over Twelve Months				Total
(In thousands)	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
December 31, 2022

Securities available for sale
Debt securities:
Municipal bonds and obligations	$	2,406	$	36,696	$	624	$	2,763	$	3,030	$	39,459
Agency collateralized mortgage obligations	23,052		247,509		76,735		284,434		99,787		531,943
Agency mortgage-backed securities	3,124		37,540		93,872		508,683		96,996		546,223
Agency commercial mortgage-back securities	9,885		96,396		25,865		132,043		35,750		228,439
Corporate bonds	1,709		25,657		1,229		9,929		2,938		35,586

Other bonds and obligations	—		—		66		295		66		295


Total securities available for sale	$	40,176	$	443,798	$	198,391	$	938,147	$	238,567	$	1,381,945

Securities held to maturity
Municipal bonds and obligations	5,476		125,494		18,228		38,341		23,704		163,835
Agency collateralized mortgage obligations	2,734		49,539		17,686		58,177		20,420		107,716
Agency mortgage-backed securities	300		2,419		8,940		39,299		9,240		41,718
Agency commercial mortgage-back securities	447		9,713		22,756		102,290		23,203		112,003
Tax advantaged economic development bonds	1		142		120		1,008		121		1,150
Total securities held to maturity	8,958		187,307		67,730		239,115		76,688		426,422

Total	$	49,134	$	631,105	$	266,121	$	1,177,262	$	315,255	$	1,808,367

December 31, 2021
Securities available for sale
Debt securities:

Agency collateralized mortgage obligations	$	9,626	$	375,132	$	1,386	$	27,025	$	11,012	$	402,157
Agency mortgage-backed securities	3,179		222,887		4,463		175,941		7,642		398,828
Agency commercial mortgage-backed securities	1,609		103,354		2,019		49,313		3,628		152,667
Corporate bonds	114		11,115		—		—		114		11,115




Total securities available for sale	$	14,528	$	712,488	$	7,868	$	252,279	$	22,396	$	964,767

Securities held to maturity
Municipal bonds and obligations	693		36,981		—		—		693		36,981
Agency collateralized mortgage obligations	1,808		49,308		1,705		36,212		3,513		85,520
Agency mortgage-backed securities	839		26,656		659		26,025		1,498		52,681
Agency commercial mortgage-back securities	1,255		80,406		2,034		51,654		3,289		132,060
Tax advantaged economic development bonds	15		1,255		—		—		15		1,255
Total securities held to maturity	4,610		194,606		4,398		113,891		9,008		308,497

Total	$	19,138	$	907,094	$	12,266	$	366,170	$	31,404	$	1,273,264


(In thousands)	Balance at Beginning of Period		Charge-offs		Recoveries		Provision for Credit Losses		Balance at End of Period
Year ended December 31, 2022
Construction	$	3,206	$	—	$	—	$	(1,979)	$	1,227
Commercial multifamily	6,120		(94)		112		(4,328)		1,810
Commercial real estate owner occupied	12,752		(687)		702		(2,028)		10,739
Commercial real estate non-owner occupied	32,106		(5,894)		1,549		2,963		30,724
Commercial and industrial	22,584		(18,447)		3,050		11,556		18,743

Residential real estate	22,406		(555)		1,019		(4,204)		18,666
Home equity	4,006		(166)		283		(1,950)		2,173
Consumer other	2,914		(2,215)		505		10,984		12,188
Total allowance for credit losses	$	106,094	$	(28,058)	$	7,220	$	11,014	$	96,270


(In thousands)	Balance at Beginning of Period		Impact of Adopting ASC 326		Sub-total		Charge-offs		Recoveries		Provision for Credit Losses		Balance at End of Period
Year ended December 31, 2020
Construction	$	2,713	$	(342)	$	2,371	$	(834)	$	—	$	3,574	$	5,111
Commercial multifamily	4,413		(1,842)		2,571		(100)		100		3,345		5,916
Commercial real estate owner occupied	4,880		6,062		10,942		(8,686)		1,053		9,071		12,380
Commercial real estate non-owner occupied	16,344		11,201		27,545		(11,653)		307		19,651		35,850
Commercial and industrial	20,099		(2,189)		17,910		(19,328)		4,285		22,146		25,013

Residential real estate	9,970		6,799		16,769		(2,285)		1,359		12,648		28,491
Home equity	1,470		4,884		6,354		(347)		292		183		6,482
Consumer other	3,686		861		4,547		(2,562)		609		5,465		8,059
Total allowance for credit losses	$	63,575	$	25,434	$	89,009	$	(45,795)	$	8,005	$	76,083	$	127,302


(In thousands)	Total
Balance at December 31, 2019	$	100
Impact of adopting ASC 326	7,993
Sub-Total	8,093
Release of expense for credit losses	(464)
Balance at December 31, 2020	$	7,629


	Term Loans Amortized Cost Basis by Origination Year
(In thousands)	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
As of December 31, 2022
Construction
Risk rating
Pass	$	153,393	$	133,708	$	25,634	$	3,432	$	1,361	$	1,924	$	—	$	—	$	319,452
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Total	$	153,393	$	133,708	$	25,634	$	3,432	$	1,361	$	1,924	$	—	$	—	$	319,452

Commercial multifamily:
Risk rating
Pass	$	205,124	$	61,032	$	27,583	$	100,696	$	67,675	$	149,633	$	205	$	—	$	611,948
Special Mention	—		—		2,628		—		—		—		—		—		2,628
Substandard	—		—		—		—		5,512		—		—		—		5,512
Total	$	205,124	$	61,032	$	30,211	$	100,696	$	73,187	$	149,633	$	205	$	—	$	620,088

Commercial real estate owner occupied:
Risk rating
Pass	$	131,096	$	127,270	$	58,835	$	82,576	$	75,322	$	154,056	$	3,464	$	—	$	632,619
Special Mention	—		—		387		—		—		—		—		—		387
Substandard	1,003		122		31		282		1,056		4,989		—		—		7,483
Total	$	132,099	$	127,392	$	59,253	$	82,858	$	76,378	$	159,045	$	3,464	$	—	$	640,489

Commercial real estate non-owner occupied:
Risk rating
Pass	$	621,685	$	410,359	$	175,456	$	333,783	$	313,124	$	530,322	$	17,846	$	—	$	2,402,575
Special Mention	—		—		—		—		20,000		18,462		—		—		38,462
Substandard	—		—		7,237		13,623		15,610		18,730		—		—		55,200
Total	$	621,685	$	410,359	$	182,693	$	347,406	$	348,734	$	567,514	$	17,846	$	—	$	2,496,237

Commercial and industrial:
Risk rating
Pass	$	282,781	$	147,070	$	56,880	$	67,975	$	83,223	$	99,367	$	648,956	$	—	$	1,386,252
Special Mention	—		5,811		1,290		1,332		11,502		912		2,632		—		23,479
Substandard	204		496		3,640		8,139		1,981		2,799		10,581		—		27,840
Doubtful	—		—		—		—		—		56		7,609		—		7,665
Total	$	282,985	$	153,377	$	61,810	$	77,446	$	96,706	$	103,134	$	669,778	$	—	$	1,445,236









Residential real estate
Risk rating
Pass	$	997,981	$	280,308	$	96,548	$	70,845	$	138,894	$	713,744	$	165	$	—	$	2,298,485
Special Mention	—		364		—		861		202		707		—		—		2,134
Substandard	—		284		448		267		1,857		8,972		—		—		11,828
Total	$	997,981	$	280,956	$	96,996	$	71,973	$	140,953	$	723,423	$	165	$	—	$	2,312,447


(In thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Loans
December 31, 2022
Construction	$	—	$	—	$	—	$	—	$	319,452	$	319,452
Commercial multifamily	—		214		—		214		619,874		620,088
Commercial real estate owner occupied	122		—		3,302		3,424		637,065		640,489
Commercial real estate non-owner occupied	143		—		191		334		2,495,903		2,496,237
Commercial and industrial	1,173		1,438		18,658		21,269		1,423,967		1,445,236

Residential real estate	3,694		2,134		11,724		17,552		2,294,895		2,312,447
Home equity	168		57		2,119		2,344		225,106		227,450
Consumer other	1,990		1,028		2,158		5,176		268,734		273,910
Total	$	7,290	$	4,871	$	38,152	$	50,313	$	8,284,996	$	8,335,309



(in thousands)	30-59 Days Past Due		60-89 Days Past Due		>90 Days Past Due		Total Past Due		Current		Total Loans		Past Due > 90 days and Accruing
December 31, 2017
Commercial real estate:
Construction	$	—	$	—	$	—	$	—	$	181,371	$	181,371	$	—
Single and multi-family	—		—		451		451		216,632		217,083		—
Commercial real estate	1,925		48		5,023		6,996		1,812,257		1,819,253		457
Total	1,925		48		5,474		7,447		2,210,260		2,217,707		457
Commercial and industrial loans
Total	4,031		1,912		6,023		11,966		1,170,603		1,182,569		128
Residential mortgages:
1-4 family	2,412		242		2,186		4,840		1,803,184		1,808,024		520
Construction	—		—		—		—		5,177		5,177		—
Total	2,412		242		2,186		4,840		1,808,361		1,813,201		520
Consumer loans:
Home equity	444		1,235		1,747		3,426		291,528		294,954		120
Auto and other	3,389		599		1,597		5,585		598,182		603,767		143
Total	3,833		1,834		3,344		9,011		889,710		898,721		263
Total	$	12,201	$	4,036	$	17,027	$	33,264	$	6,078,934	$	6,112,198	$	1,368


	December 31, 2022
(In thousands)	Nonaccrual Amortized Cost		Nonaccrual With No Related Allowance		Past Due 90 Days or Greater and Accruing		Interest Income Recognized on Nonaccrual
Construction	$	—	$	—	$	—	$	—
Commercial multifamily	—		—		—		—
Commercial real estate owner occupied	2,202		1,411		1,100		—
Commercial real estate non-owner occupied	191		73		—		—
Commercial and industrial	16,992		14,223		1,666		—

Residential real estate	8,901		5,307		2,823		—
Home equity	1,568		388		551		—
Consumer other	1,260		2		898		—
Total	$	31,114	$	21,404	$	7,038	$	—


	Type of Collateral
(In thousands)	Real Estate		Investment Securities/Cash		Other
December 31, 2022
Construction	$	—	$	—	$	—
Commercial multifamily	—		—		—
Commercial real estate owner occupied	2,793		—		—
Commercial real estate non-owner occupied	384		—		—
Commercial and industrial	288		—		16,931

Residential real estate	3,910		—		—
Home equity	501		—		—
Consumer other	2		—		—
Total loans	$	7,878	$	—	$	16,931