What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-02-28 compared with 2023-03-01 · 341 added, 448 removed, 2444 unchanged (24% of the section changed)

21 unchanged sentences

David Rosato 62 Senior Executive Vice President, Chief Financial Officer

Lucia “Lucy” Bellomia 57 Senior Executive Vice President, Head of Retail Banking

James Brown 58 Senior Executive Vice President, Head of Commercial Banking

Carmichael 46 Executive Vice President, Chief Internal Audit Officer

Jacqueline Courtwright 60 Senior Executive Vice President, Chief Human Resources and Culture Officer

2 unchanged sentences

Lindenmuth 56 Senior Executive Vice President, Chief Risk Officer

Andrew Plumridge 51 Executive Vice President, Chief Internal Audit Officer

Gordon Prescott 62 Senior Executive Vice President, General Counsel and Corporate Secretary

21 unchanged sentences

Rosato is a former board member of the Federal Home Loan Bank of Boston.

Lucia “Lucy” Bellomia.

Bellomia is Senior Executive Vice President and 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 Philadelphia, Santander Bank, PNC Bank, Sun National Bank, and Pioneer Savings and Loans.

Brown joined the Company in January 2023 as Senior Executive Vice President, Commercial Banking.

2 unchanged sentences

He served with Silicon Valley Bank as Head of Specialty Commercial within the Private Bank, following the acquisition of Boston Private in 2021.

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.

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.

18 unchanged sentences

Lindenmuth was also a Capital Markets, Mortgage Banking, and Fraud Specialist.

Andrew Plumridge.

Plumridge joined the Company in July 2023 as Executive Vice President, Chief Internal Audit Officer.

He reports to the Audit Committee of the Board and administratively to the CEO.

Plumridge previously served as Senior Vice President and General Auditor of Boston Private Financial Holdings, Inc.

Prior to joining Boston Private, Plumridge held senior audit and consulting positions with State Street Corporation and PwC.

Gordon Prescott, Age 62.

56 unchanged sentences

• Consolidated Balance Sheets as of December 31, 2023 and 2022

• 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 Income for the Years Ended December 31, 2023, 2022, and 2021

• Consolidated Statements of Comprehensive Income/(Loss) for the Years Ended December 31, 2023, 2022, and 2021

• Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 2023, 2022, and 2021

28 unchanged sentences

2022 Equity Incentive Plan (17)

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

4 unchanged sentences

32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

97 Berkshire Hills Bancorp, Inc.

Clawback Policy

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

(i) the Consolidated Statements of Condition, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income/(Loss), (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

(1) Incorporated herein by reference from the Exhibits to Form 10-Q as filed on August 9, 2018

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(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.

FORM 10-K SUMMARY

1 unchanged sentence

Berkshire Hills Bancorp, Inc.

March 1, 2023 By:

February 28, 2024

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.

Mhatre Director, President, & Chief Executive Officer March 1, 2023

Mhatre Director, President, & Chief Executive Officer February 28, 2024

Mhatre (principal executive officer)

David Rosato Senior Executive Vice President, Chief Financial Officer March 1, 2023

David Rosato Senior Executive Vice President, Chief Financial Officer February 28, 2024

David Rosato (principal financial officer)

/s/ Brett Brbovic Senior Managing Director, Chief Accounting Officer March 1, 2023

Brett Brbovic (principal accounting officer)

Brunelle Chairperson March 1, 2023

/s/ Baye Adofo-Wilson Director March 1, 2023

Brunelle Chairperson February 28, 2024

/s/ Baye Adofo-Wilson Director February 28, 2024

Baye Adofo-Wilson

Charnley Director March 1, 2023

Davies Director March 1, 2023

Desai Director March 1, 2023

/s/ Mary Anne Callahan

Director February 28, 2024

Mary Anne Callahan

Charnley Director February 28, 2024

Desai Director February 28, 2024

/s/ William H.

Hughes, III Director March 1, 2023

Hughes, III Director February 28, 2024

/s/ Jeffrey W.

Kip Director March 1, 2023

/s/ Sylvia Maxfield Director March 1, 2023

Kip Director February 28, 2024

/s/ Sylvia Maxfield Director February 28, 2024

Sylvia Maxfield

/s/ Laurie Norton Moffatt Director March 1, 2023

/s/ Laurie Norton Moffatt Director February 28, 2024

Laurie Norton Moffatt

/s/ Karyn Polito Director March 1, 2023

/s/ Jonathan I.

Shulman Director March 1, 2023

/s/ Karyn Polito Director February 28, 2024

Director February 28, 2024

/s/ Michael A.

Zaitzeff Director March 1, 2023

Zaitzeff Director February 28, 2024

CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

11 unchanged sentences

President & Chief Executive Officer Senior Executive Vice President & Chief Financial Officer

March 1, 2023 March 1, 2023

February 28, 2024 February 28, 2024

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

4 unchanged sentences

We have audited the accompanying consolidated balance sheets of Berkshire Hills Bancorp, Inc.

(the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive (loss)/income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements").

(the "Company") as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income/(loss), changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, 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, 2023, based on criteria established in Internal Control – Integrated Framework:

3 unchanged sentences

(2013) issued 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

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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

Allowance for Credit Losses on 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.

10 unchanged sentences

• Significant assumptions and judgements applied within the allowance for credit loss calculation.

Substantively testing management’s process to e stimate the allow ance f or credit loss calcu lation included:

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.

5 unchanged sentences

New York, New York

March 1, 2023

February 28, 2024

BERKSHIRE HILLS BANCORP, INC.

29 unchanged sentences

Total deposits 10,633,384 10,327,269

Short-term debt 260,000 —

Long-term Federal Home Loan Bank advances 125,223 4,445

19 unchanged sentences

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENTS OF INCOME

Years Ended December 31,

11 unchanged sentences

Deposit related fees 34,155 32,026 29,813

Loan fees and revenue 21,731 35,060 16,840

Loan related fees 10,595 9,467 16,427

Gain on SBA loan sales 10,334 12,494 20,689

Insurance commissions and fees — — 7,003

Wealth management fees 10,197 10,008 10,530

Mortgage banking income 230 2,056 5,190

Total fee income 65,281 63,995 84,462

Other 2,045 6,973 6,631

(Loss) on securities, net ( 2,031 ) ( 787 ) ( 7,520 )

Fair value adjustments on securities 513 ( 2,037 ) ( 787 )

(Loss)/gain on sale of AFS securities ( 25,057 ) 6 —

Gain on sale of business operations and assets, net — — 52,942

11 unchanged sentences

Amortization of intangible assets 4,820 5,134 5,200

Goodwill impairment — — 553,762

Merger, restructuring and conversion related expenses 6,261 8,909 5,781

1 unchanged sentence

Total non-interest expense 301,508 288,716 285,893

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 )

Income before income taxes 78,322 113,818 149,021

Income tax expense 8,724 21,285 30,357

Net income $ 69,598 $ 92,533 $ 118,664

Basic earnings per share $ 1.61 $ 2.03 $ 2.41

Diluted earnings per share $ 1.60 $ 2.02 $ 2.39

Weighted average common shares outstanding:

4 unchanged sentences

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

Years Ended December 31,

(In thousands) 2023 2022 2021

Net income/(loss) $ 92,533 $ 118,664 $ ( 533,017 )

Other comprehensive (loss)/income, before tax:

Net income $ 69,598 $ 92,533 $ 118,664

Other comprehensive income/(loss), before tax:

Changes in unrealized gains and losses on securities available-for-sale 47,960 ( 235,081 ) ( 46,794 )

1 unchanged sentence

Changes in unrealized gains and losses on pension 316 1,674 993

Total other comprehensive (loss)/income, before tax ( 240,074 ) ( 45,801 ) 25,237

Income taxes related to other comprehensive (loss)/income:

Total other comprehensive income/(loss), before tax 50,678 ( 240,074 ) ( 45,801 )

Income taxes related to other comprehensive income/(loss):

Changes in unrealized gains and losses on securities available-for-sale ( 11,928 ) 60,922 11,937

1 unchanged sentence

Changes in unrealized gains and losses on pension ( 84 ) ( 446 ) ( 250 )

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 )

Total income tax (expense)/benefit related to other comprehensive income/(loss) ( 12,642 ) 62,265 11,687

Total other comprehensive income/(loss) 38,036 ( 177,809 ) ( 34,114 )

Total comprehensive income/(loss) $ 107,634 $ ( 85,276 ) $ 84,550

The accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Preferred Stock Common Stock Additional paid-in Unearned Retained

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

(In thousands, except per share data) Shares Amount capital compensation earnings (loss) income stock Total

Balance at January 1, 2021 50,833 $ 528 $ 1,427,239 $ ( 6,245 ) $ ( 233,344 ) $ 30,871 $ ( 31,276 ) $ 1,187,773

Comprehensive (loss):

Net (loss) — — — — — — ( 533,017 ) — — ( 533,017 )

Other net comprehensive income — — — — — — — 18,878 — 18,878

Comprehensive income:

Net income — — — — 118,664 — — 118,664

Other net comprehensive (loss) — — — — — ( 34,114 ) — ( 34,114 )

Total comprehensive income — — — — ( 118,664 ) ( 34,114 ) — 84,550

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 ($ 0.48 per share)

— — — — ( 24,553 ) — — ( 24,553 )

Cash dividends declared on preferred shares ($ 1.20 per share)

— — — — — — ( 313 ) — — ( 313 )

Treasury stock purchased ( 2,500 ) — — — — — ( 68,712 ) ( 68,712 )

5 unchanged sentences

Balance at December 31, 2021 48,667 $ 528 $ 1,423,445 $ ( 9,056 ) $ ( 139,383 ) $ ( 3,243 ) $ ( 89,856 ) $ 1,182,435

Comprehensive income:

Comprehensive (loss):

Net income — — — — 92,533 — — 92,533

Other net comprehensive (loss) — — — — — ( 177,809 ) — ( 177,809 )

Total comprehensive income — — — — — — 118,664 ( 34,114 ) — 84,550

Total comprehensive (loss) — — — — 92,533 ( 177,809 ) — ( 85,276 )

Cash dividends declared on common shares ($ 0.54 per share)

9 unchanged sentences

Net income — — — — 69,598 — — 69,598

Other net comprehensive (loss) — — — — — — — ( 177,809 ) — ( 177,809 )

Other net comprehensive income — — — — — 38,036 — 38,036

Total comprehensive income — — — — 69,598 38,036 — 107,634

Impact of ASU No.

2022-02 Adoption — — — — 401 — — 401

Cash dividends declared common shares ($ 0.72 per share)

13 unchanged sentences

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 )

Net income $ 69,598 $ 92,533 $ 118,664

Adjustments to reconcile net income to net cash provided by operating activities:

8 unchanged sentences

Securities losses/(gains), net 24,544 2,031 787

(Gain) on SBA loan sales ( 10,334 ) ( 12,494 ) ( 20,689 )

Net change in loans held-for-sale 2,074 5,168 5,775

2 unchanged sentences

Amortization of interest in tax-advantaged projects 8,018 3,508 3,444

Goodwill impairment — — 553,762

Gain on sale of business operations and other assets — — ( 52,942 )

1 unchanged sentence

Net change in other 14,387 ( 12,076 ) 18,282

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 $ 157,156 $ 110,739 $ 84,788

1 unchanged sentence

Net decrease in trading security 860 818 776

Purchases of marketable equity securities — — ( 17,631 )

Proceeds from sales of marketable equity securities — — 2,880

11 unchanged sentences

Purchase of premises and equipment, net ( 1,820 ) ( 1,495 ) ( 1,606 )

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONCLUDED)

Years ended December 31,

(In thousands) 2022 2021 2020

Proceeds from sales of seasoned commercial loan portfolios — 24,323 16,417

1 unchanged sentence

Cash outflows from sale of business operations and other assets — — ( 352,814 )

Net investing cash flows provided/(used) by discontinued operations — — 252

Net cash (used)/provided by investing activities $ ( 284,461 ) $ ( 1,260,886 ) $ 621,243

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONCLUDED)

Years Ended December 31,

(In thousands) 2023 2022 2021

Cash flows from financing activities:

16 unchanged sentences

Interest paid on borrowed funds 46,584 9,043 11,385

Income taxes (refunded)/paid, net 28,439 14,816 ( 13,864 )

Income taxes paid, net

12,307 28,439 14,816

Other non-cash changes:

Other net comprehensive (loss)/income $ ( 177,809 ) $ ( 34,114 ) $ 18,878

Impact to retained earnings from adoption of ASC 326, net of tax — — 24,380

Mid-Atlantic assets reclassified to held for sale — — 317,304

Mid-Atlantic liabilities reclassified to held for sale — — 630,065

Other net comprehensive income/(loss)

$ 38,036 $ ( 177,809 ) $ ( 34,114 )

Impact to retained earnings from adoption of ASU 2022-02 401 — —

Premises and equipment reclassified to held-for-sale 8,714 1,380 4,577

Mid-Atlantic loans held-for-sale reclassified to portfolio loans, net — — 29,418

2 unchanged sentences

Held-for-sale loans reclassified to held-for-investment, net — 606 —

Premises and equipment reclassified to held-for-sale 1,380 4,577 —

Real estate owned acquired in settlement of loans — — 224

Premium payable on cash flow hedges — 2,296 —

12 unchanged sentences

The Company has evaluated subsequent events for potential recognition and/or disclosure through the date these financial statements were issued.

Reclassifications

Reclassification

Certain items in prior financial statements have been reclassified to conform to the current presentation.

2 unchanged sentences

Actual results could differ from those estimates.

Refer to Note 17 – Other Commitments, Contingencies, and Off-Balance Sheet Activities for pandemic related risks and uncertainties.

Business Combinations

Business combinations are accounted for using the acquisition method of accounting.

Under this method, the accounts of an acquired entity are included with the acquirer’s accounts as of the date of acquisition with any excess of purchase price over the fair value of the net assets acquired (including identifiable intangibles) capitalized as goodwill.

To consummate an acquisition, the Company will typically issue common stock and/or pay cash, depending on the terms of the acquisition agreement.

The value of common shares issued is determined based upon the market price of the stock as of the closing of the acquisition.

Cash and Cash equivalents

47 unchanged sentences

Automobile and unsecured consumer loans generally continue accruing until one hundred and twenty days delinquent, at which time they are charged off.

All interest accrued but not collected for loans that are placed on non-accrual or charged-off is reversed against interest income, except for certain loans designated as well-secured.

The interest on non-accrual loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual.

All interest accrued but not collected for loans that are placed on nonaccrual or charged-off is reversed against interest income, except for certain loans designated as well-secured.

The interest on nonaccrual loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual.

Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

7 unchanged sentences

Subsequent changes to the allowance for credit losses are recorded through provision expense.

Allowance for Credit Losses for Loans

The allowance for credit losses for loans (“ACLL”) is comprised of the allowance for credit losses on loans and the allowance for unfunded commitments which is accounted for as a separate liability in other liabilities on the consolidated balance sheets.

Allowance for Credit Losses on Loans

The allowance for credit losses on loans (“ACLL”) is comprised of the allowance for credit losses on loans.

The ACLL is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans.

Loans are charged off against the allowance when management believes the uncollectibility of a loan balance is confirmed.

Loans are charged off against the allowance when management believes the uncollectability of a loan balance is confirmed.

Accrued interest receivable is excluded from the estimate of credit losses.

9 unchanged sentences

The allowance for unfunded commitments is maintained at a level by the Company to be sufficient to absorb expected lifetime losses related to unfunded credit facilities (including unfunded loan commitments and letters of credit).) The Company’s allowance for credit losses on unfunded commitments is recognized as a liability (other liability on the Consolidated Balance Sheets), with adjustments to the reserve recognized in other noninterest expense in the Consolidated Statements of Operations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The ACLL is measured on a collective (pool) basis when similar risk characteristics exist.

1 unchanged sentence

Risk characteristics relevant to each portfolio segment are as follows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Construction – Loans in this segment primarily include real estate development loans for which payment is derived from sale of the property or long term financing at completion.

1 unchanged sentence

Commercial real estate multifamily, owner occupied and non-owner – Loans in this segment are primarily owner-occupied or income-producing properties throughout New England and Northeastern New York.

The underlying cash flows generated by the properties are adversely impacted by a downturn in the economy, which in turn, will have an effect on the credit quality in this segment.

The underlying cash flows generated by the properties may be more adversely affected by conditions in the real estate markets or in the general economy, which in turn, will have an effect on the credit quality in this segment.

Management monitors the cash flows of these loans.

7 unchanged sentences

The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this segment.

Loans that do not share risk characteristics are evaluated on an individual basis, which the Company has determined to be non-accrual loans over a certain threshold, loans that were determined to be Troubled Debt Restructurings (“TDRs”) and PCD loans.

Loans evaluated individually are not also included in the collective evaluation.

Loans that do not share risk characteristics are evaluated on an individual basis and are not also included in the collective evaluation.

Estimates of specific allowance may be determined by the present value of anticipated future cash flows or the loan’s observable fair market value, or the fair value of the collateral less costs to sell, if the loan is collateral dependent.

However, for collateral dependent loans, the amount of the amortized cost in a loan that exceeds the fair value of the collateral is charged-off against the allowance for credit losses on loans in lieu of an allocation of a specific allowance amount when such an amount has been identified definitively as uncollectible.

Prior to the adoption of ASC 326 on January 1, 2020, the Company calculated the allowance for loan losses using incurred losses methodology.

Bank-Owned Life Insurance

6 unchanged sentences

The shortfall, if any, of the loan balance over the fair value of the property or collateral (excluding taxi medallions), less cost to sell, at the time of transfer from loans to other real estate owned or repossessed collateral is charged to the allowance for credit losses on loans.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Subsequent to transfer, the asset is carried at lower of cost or fair value less cost to sell and periodically evaluated for impairment.

1 unchanged sentence

Subsequent impairments in the fair value of other real estate owned and repossessed collateral are charged to expense in the period incurred.

Net operating income or expense related to other real estate owned and repossessed collateral is included in operating expenses in the accompanying Consolidated Statements of Operations.

Net operating income or expense related to other real estate owned and repossessed collateral is included in operating expenses in the accompanying Consolidated Statements of Income.

Because of changing market conditions, there are inherent uncertainties in the assumptions with respect to the estimated fair value of other real estate owned and repossessed collateral.

1 unchanged sentence

Capitalized Servicing Rights

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Capitalized servicing rights are included in “other assets” in the Consolidated Balance Sheets.

12 unchanged sentences

Leasehold improvements are amortized on the straight-line method over the shorter of the lease term, plus optional terms if certain conditions are met, or the estimated useful life of the asset.

Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in a business combination.

Goodwill is assessed annually for impairment, and more frequently if events or changes in circumstances indicate that there may be an impairment.

Adverse changes in the economic environment, declining operations, unanticipated competition, loss of key personnel, or other factors could result in a decline in the implied fair value of goodwill.

Subsequent reversals of goodwill impairment are prohibited.

As of December 31, 2020, the Company no longer has goodwill.

Other Intangibles

3 unchanged sentences

If the carrying amount exceeds fair value, an impairment charge is recorded to income.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Transfers of Financial Assets

8 unchanged sentences

For those tax positions where it is more likely than not that a tax benefit will be sustained, we have determined the amount of the tax benefit to be recognized by estimating the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information.

For those income tax positions where it is more-likely-than-not that a tax benefit will not be sustained, no tax benefit has been recognized in the financial statements.

For those income tax positions

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

where it is more-likely-than-not that a tax benefit will not be sustained, no tax benefit has been recognized in the financial statements.

Where applicable, associated interest and penalties have also been recognized.

9 unchanged sentences

The Buyer paid BIG an aggregate purchase price of $ 41.5 million, minus $ 1.6 million for executive goodwill purchase price payments paid by the Buyer at the Closing to certain executives of BIG.

The Company recorded a $ 37.2 million pre-tax gain related to this sale in 2021, which is included in gain on sale of business operations and assets on the Consolidated Statements of Operations.

The Company recorded a $ 37.2 million pre-tax gain related to this sale in 2021, which is included in gain on sale of business operations and assets on the Consolidated Statements of Income.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

59 unchanged sentences

Due to the SI Financial acquisition in 2019, the Company inherited a tax-qualified defined benefit pension plan.

The plan was frozen effective September 6, 2013 and SI Financial recorded a contingent obligation to settle the plan at a future date, which was assumed by the Company.

The plan was frozen effective September 6, 2013.

The plan is a single plan under the Internal Revenue Code and, as a result, all of the assets stand behind all of liabilities.

6 unchanged sentences

Recently Adopted Accounting Principles

There were no new applicable material accounting pronouncements adopted by the Company since December 31, 2021.

Effective January 1, 2023, the Company adopted ASU No.

2022-02, “Financial Instruments – Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures.” The adoption did not have a material impact on the Company’s Consolidated Financial Statements.

The ASU eliminates the troubled debt restructuring (“TDR”) accounting model that was adopted with Topic 326, “Financial Instruments – Credit Losses” and enhances disclosure requirements for certain loan refinancings and restructurings when a borrower is experiencing financial difficulty.

The ASU requires prospective disclosure of current-period gross write-offs by year of origination.

Refer to Note 5 – Loans and Related Allowance for Credit Losses for the new financial statement disclosures applicable under this update.

Future Application of Accounting Pronouncements

In March 2023, the FASB issued ASU No.

2022-01, “Derivatives and Hedging (Topic 815):

Fair Value Hedging – Portfolio Layer Method.” The guidance expands the current last-of-layer method to allow multiple hedge layers of a single closed portfolio (renamed to portfolio layer method) and expands the portfolio layer method to include nonprepayable financial assets.

The ASU specifies eligible hedging instruments in a single-layer hedge and provides additional guidance on accounting for and disclosure of hedge basis adjustments that are applicable to the portfolio layer method.

Further, hedge basis adjustments should be considered when determining credit losses for assets included in the closed portfolio.

2023-02, “Investments – Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (a consensus of the Emerging Issues Task Force).” The guidance is intended to improve the accounting and disclosures for investments in tax credit structures.

The ASU allows entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits.

Previously, this method was only available for qualifying investments in low-income housing tax credit structures.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years.

Early adoption is permitted.

The adoption is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In March 2022, the FASB issued ASU No.

2022-02, “Financial Instruments – Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures.” The ASU eliminates the troubled debt restructuring (“TDR”) accounting model that was adopted with Topic 326, “Financial Instruments – Credit Losses” and enhances disclosure requirements for certain loan refinancings and restructurings when a borrower is experiencing financial difficulty.

The ASU requires prospective disclosure of current-period gross write-offs by year of origination.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years.

The adoption is not expected to have a material impact on the Company’s Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DISCONTINUED OPERATIONS AND BRANCH SALE

During the first quarter of 2019, the Company reached the decision to pursue the sale of the national mortgage banking operations of First Choice Loan Services, Inc.

(“FCLS”) – a subsidiary of the Bank.

The decision was based on a number of strategic priorities and other factors, including the competitiveness of the mortgage industry.

As a result of these actions, the Company classified the operations of FCLS as discontinued under ASC 205-20.

The Consolidated Balance Sheets, Consolidated Statements of Operations, and Consolidated Statements of Cash Flows present discontinued operations retrospectively for current and prior periods.

On May 7, 2020, the Company completed a transaction to sell certain assets and liabilities related to the operations of FCLS.

During the fourth quarter of 2020, the Company completed the final wind-down of the operations of FCLS.

Operating results for the year ended December 31, 2020, included expenses related to the wind-down of operations.

At year-end 2022 and 2021, there were no assets or liabilities related to the discontinued operations of FCLS.

The following presents operating results of the discontinued operations of FCLS for the years ended December 31, 2022, 2021, and 2020:

Years Ended December 31,

(in thousands) 2022 2021 2020

Interest income $ — $ — $ 1,525

Interest expense — — 391

Net interest income — — 1,134

Non-interest (loss)/income — — ( 4,740 )

Total net revenue — — ( 3,606 )

Non-interest expense — — 23,249

(Loss) from discontinued operations before income taxes — — ( 26,855 )

Income tax (benefit) — — ( 7,013 )

Net (loss) from discontinued operations $ — $ — $ ( 19,842 )

Mid-Atlantic Branch Sale

On August 27, 2021 the Company completed the sale of eight Mid-Atlantic branches to Investors Bank of Short Hills, New Jersey.

This sale was made pursuant to a purchase and assumption agreement entered into by the banks on December 2, 2020.

The sale included all branch premises and equipment, and Investors also assumed related operations and the employment of associated staff.

The branch sale is not expected to impact Berkshire’s growing Mid-Atlantic specialized commercial lending operations, including SBA lending at its 44 Business Capital Division and its asset-based lending relationships.

The sale involved the assignment of deposits which totaled $ 631 million and loans which totaled $ 220 million as of August 27, 2021.

These instruments were classified as held for sale in the financial statements and were not included in total deposits and total loans reported by the Company at December 31, 2020.

Investors Bank paid a premium of 3.0 % of the deposit balance transferred.

The Company provided a settlement cash payment of $ 391 million as part of the sale for the assumption of covered deposit liabilities by Investors.

The Company recorded a $ 14.7 million pre-tax gain related to this branch sale in 2021, which is included in gain on sale of business operations and assets on the Consolidated Statements of Operations.

As of December 31, 2022 and 2021, there were no assets and liabilities held for sale related to the branch sale.

The Company is still evaluating;

however, the adoption removes amortization expense from non-interest income and moves to tax expense resulting in an increase to the effective tax rate.

In December 2023, the FASB issued ASU No.

2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.” The ASU requires disclosure in the rate reconciliation table of additional categories of information and more details about the reconciling items in some categories if items meet a quantitative threshold.

The ASU also requires all entities to disclose income taxes paid, net of refunds, disaggregated by federal, state and foreign taxes for annual periods and to disaggregate the information by jurisdiction based on a quantitative threshold, among other things.

The amendments in this ASU are effective for annual periods beginning after December 15, 2024.

Early adoption is permitted.

The Company is still evaluating;

however, the adoption is not expected to have a material impact on the Company’s Consolidated Financial Statements.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash on hand, amounts due from banks, and short-term investments with original maturities of 90 days or less.

At year-end 2022, there were no short-term investments pledged as collateral support for derivative financial contracts.

At year-end 2021, short-term investments included $ 43.7 million pledged as collateral support for derivative financial contracts.

At year-end 2023 and 2022, there were no short-term investments pledged as collateral support for derivative financial contracts.

The Federal Reserve Bank requires the Bank to maintain certain reserve requirements of vault cash and/or deposits.

3 unchanged sentences

The security had an amortized cost of $ 6.2 million and $ 7.1 million and a fair value of $ 6.1 million and $ 6.7 million at year-end 2023 and 2022, respectively.

Unrealized losses recorded through income on this security totaled $ 0.8 million, $ 0.6 million, and $ 0.3 million for 2022, 2021, and 2020, respectively.

Unrealized gains/(losses) recorded through income on this security totaled $ 0.3 million, ($ 0.8 ) million, and ($ 0.6 ) million for 2023, 2022, and 2021, respectively.

As discussed further in Note 14 - Derivative Instruments and Hedging Activities, the Company has entered into a swap contract to swap-out the fixed rate of the security in exchange for a variable rate.

47 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At year-end 2022 and 2021, accumulated net unrealized (losses) on AFS securities included in accumulated other comprehensive (loss)/income were losses of $ 238.0 million and $ 4.2 million, respectively.

At year-end 2022 and 2021, accumulated net unrealized gains on the securities reclassified from AFS to HTM included in accumulated other comprehensive (loss)/income were $ 1.1 million and $ 2.4 million, respectively.

The year-end 2022 and 2021 related income tax benefit/(liability) of $ 61.3 million and $ 0.4 million, respectively, was also included in accumulated other comprehensive (loss).

At year-end 2023 and 2022, accumulated net unrealized (losses) on AFS securities included in accumulated other comprehensive income/(loss) were losses of $ 188.9 million and $ 238.0 million, respectively.

At year-end 2023, there was no accumulated net unrealized gain on securities reclassified from AFS to HTM included in accumulated other comprehensive income/(loss).

At year-end 2022, accumulated net unrealized gains on the securities reclassified from AFS to HTM included in accumulated other comprehensive income/(loss) was $ 1.1 million.

The year-end 2023 and 2022 related income tax benefit of $ 49.4 million and $ 61.3 million, respectively, was also included in accumulated other comprehensive (loss).

The following table summarizes the activity in the allowance for credit losses for debt securities held to maturity by security type for the years ended December 31, 2023, 2022 and 2021:

5 unchanged sentences

Balance at December 31, 2021 $ 70 $ 35 $ 105

Provision expense for credit losses 6 ( 5 ) 1

Provision (benefit) for credit losses

( 4 ) ( 10 ) ( 14 )

Balance at December 31, 2022 $ 66 $ 25 $ 91

1 unchanged sentence

Balance at December 31, 2020 $ 64 $ 40 $ 104

Impact of ASC 326 adoption 83 226 309

Provision (benefit) for credit losses ( 19 ) ( 186 ) ( 205 )

Provision expense/(benefit) for credit losses

Balance at December 31, 2021 $ 70 $ 35 $ 105

5 unchanged sentences

For securities without credit ratings, the Company utilizes other financial information indicating the financial health of the underlying municipality, agency, or organization.

As of December 31, 2022, none of the Company's investment securities were delinquent or in non-accrual status.

As of December 31, 2023, none of the Company's investment securities were delinquent or in nonaccrual status.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14 unchanged sentences

The total amortized cost and fair values of these pledged securities follows.

Additionally, there is a blanket lien on certain securities to collateralize borrowings from the FHLBB, as discussed further in Note 11 - Borrowed Funds.

Additionally, there is a blanket lien on certain securities to collateralize borrowings from the FHLBB and Federal Reserve Bank of Boston, as discussed further in Note 10 - Borrowed Funds.

(In thousands) Amortized

4 unchanged sentences

Proceeds from the sale of AFS securities totaled $ 267 million in 2023.

Proceeds from the sale of AFS securities totaled $ 150 million in 2022.

During 2021, there were no sales of AFS securities.

Proceeds from the sale of AFS securities totaled $ 69 million in 2020.The amounts for the sale of AFS securities were reclassified out of accumulated other comprehensive (loss)/income and into earnings.

The (loss)/gain for the sale of AFS securities were reclassified out of accumulated other comprehensive (loss) and into earnings.

The components of net recognized gains and losses on the sale of AFS securities and the fair value change of marketable equities are as follows:

34 unchanged sentences

Debt securities:

Municipal bonds and obligations $ 2,406 $ 36,696 $ 624 $ 2,763 $ 3,030 $ 39,459

Agency collateralized mortgage obligations

5 unchanged sentences

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

3 unchanged sentences

Agency collateralized mortgage obligations 2,734 49,539 17,686 58,177 20,420 107,716

1,808 49,308 1,705 36,212 3,513 85,520

Agency mortgage-backed securities 300 2,419 8,940 39,299 9,240 41,718

839 26,656 659 26,025 1,498 52,681

Agency commercial mortgage-back securities 447 9,713 22,756 102,290 23,203 112,003

1,255 80,406 2,034 51,654 3,289 132,060

Tax advantaged economic development bonds 1 142 120 1,008 121 1,150

15 1,255 — — 15 1,255

Total securities held to maturity 8,958 187,307 67,730 239,115 76,688 426,422

11 unchanged sentences

At this time, the Company feels the bonds in this portfolio carry minimal risk of default and the Company is appropriately compensated for that risk.

There were no material underlying credit downgrades during the quarter.

There were no material underlying credit downgrades during 2023.

All securities are performing.

15 unchanged sentences

The Company reviews the financial strength of these bonds and has concluded that the amortized cost remains supported by the expected future cash flows of these securities.

All securities are performing.

AFS other bonds and obligations

8 unchanged sentences

At this time, the Company feels the bonds in this portfolio carry minimal risk of default and the Company is appropriately compensated for that risk.

There were no material underlying credit downgrades during the quarter.

There were no material underlying credit downgrades during 2023.

All securities are performing.

14 unchanged sentences

At year-end 2023, 1 out of 2 securities in the Company’s portfolio of tax-advantaged economic development

bonds were in unrealized loss positions.

bonds was in an unrealized loss position.

Aggregate unrealized losses represented 6.1 % of the amortized cost of

24 unchanged sentences

Net gains on sales of loans were $ 10.3 million, $ 12.5 million, and $ 20.7 million for the years 2023, 2022, and 2021, respectively.

These amounts are included in Loan Fees and Revenue on the Consolidated Statements of Operations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

26 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Allowance for Credit Losses for Loans

The Allowance for Credit Losses for Loans (“ACLL”) is comprised of the allowance for credit losses on loans, and the allowance for unfunded commitments is accounted for as a separate liability in other liabilities on the Consolidated Balance Sheets.

Allowance for Credit Losses on Loans

The Allowance for Credit Losses on Loans (“ACLL”) is comprised of the allowance for credit losses on loans, and the allowance for unfunded commitments is accounted for as a separate liability in other liabilities on the Consolidated Balance Sheets.

The level of the ACLL represents management’s estimate of expected credit losses over the expected life of the loans at the balance sheet date.

6 unchanged sentences

• the effect of other external factors such as regulatory, competition, regional market conditions, legal and technological environment and other events such as natural disasters;

• the effect of other economic factors such as economic stimulus and customer forbearance programs.

• the effect of other economic factors such as economic stimulus and customer forbearance programs (when applicable).

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company’s activity in the allowance for credit losses for loans for the years ended December 31, 2022, December 31, 2021 and December 31, 2020 was as follows:

(In thousands) Balance at Beginning of Period Charge-offs Recoveries Provision for Credit Losses Balance at End of Period

The Company’s activity in the allowance for credit losses on loans for the years ended December 31, 2023, December 31, 2022 and December 31, 2021 was as follows:

(In thousands) Balance at Beginning of Period Adoption of

2022-02 Charge-offs Recoveries Provision for Credit Losses Balance at End of Period

Year ended December 31, 2023

19 unchanged sentences

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

(In thousands) Balance at Beginning of Period Charge-offs Recoveries Provision for Credit Losses Balance at End of Period

Year ended December 31, 2021

8 unchanged sentences

Total allowance for credit losses $ 127,302 $ ( 31,018 ) $ 10,311 $ ( 501 ) $ 106,094

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company’s allowance for credit losses on unfunded commitments is recognized as a liability (other liability on the Consolidated Balance Sheets), with adjustments to the reserve recognized in other noninterest expense in the Consolidated Statements of Operations.

The Company’s activity in the allowance for credit losses on unfunded commitments for the years ended December 31, 2023, December 31, 2022, and December 31, 2021 was as follows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands) Total

8 unchanged sentences

Balance at December 31, 2020 $ 7,629

Impact of adopting ASC 326 7,993

Sub-Total 8,093

Release of expense for credit losses ( 586 )

4 unchanged sentences

Loans that are classified as Special Mention loans are considered to have potential weaknesses and are evaluated closely by management.

Substandard, including non-accruing loans, are loans for which a definitive weakness has been identified and which may make full collection of contractual cash flows questionable.

Substandard, including nonaccruing loans, are loans for which a definitive weakness has been identified and which may make full collection of contractual cash flows questionable.

Doubtful loans are those with identified weaknesses that make full collection of contractual cash flows, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

5 unchanged sentences

Residential mortgages that are 60-89 days delinquent are rated Special Mention.

Loans delinquent for 90 days or greater are rated Substandard and generally placed on non-accrual status.

Loans delinquent for 90 days or greater are rated Substandard and generally placed on nonaccrual status.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3 unchanged sentences

As of December 31, 2023

Current period gross write-offs $ — $ — $ — $ — $ — $ 1 $ — $ — $ 1

Pass $ 104,507 $ 346,419 $ 138,802 $ 29,176 $ 2,545 $ 1,098 $ — $ — $ 622,547

3 unchanged sentences

Commercial multifamily:

Current period gross write-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —

Pass $ 16,020 $ 216,477 $ 56,817 $ 26,566 $ 94,733 $ 179,923 $ 377 $ — $ 590,913

3 unchanged sentences

Commercial real estate owner occupied:

Current period gross write-offs $ — $ — $ — $ 380 $ — $ 109 $ — $ — $ 489

Pass $ 97,271 $ 120,327 $ 122,151 $ 37,914 $ 70,393 $ 165,224 $ 2,653 $ — $ 615,933

3 unchanged sentences

Commercial real estate non-owner occupied:

Current period gross write-offs $ — $ — $ — $ — $ — $ 65 $ — $ — $ 65

Pass $ 404,687 $ 591,897 $ 385,247 $ 135,134 $ 277,870 $ 736,566 $ 4,553 $ — $ 2,535,954

3 unchanged sentences

Commercial and industrial:

Current period gross write-offs $ — $ 1,154 $ 863 $ 2,763 $ 1,496 $ 9,283 $ 2,313 $ — $ 17,872

Pass $ 142,946 $ 203,126 $ 118,191 $ 69,722 $ 39,437 $ 112,770 $ 554,153 $ — $ 1,240,345

1 unchanged sentence

Substandard 432 761 11,702 1,135 3,785 12,538 22,313 — 52,666

Doubtful — — — — — 56 7,609 — 7,665

Total $ 143,904 $ 227,036 $ 133,628 $ 72,478 $ 43,832 $ 126,661 $ 611,710 $ — $ 1,359,249

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Term Loans Amortized Cost Basis by Origination Year

(In thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total

Residential real estate

Current period gross write-offs $ — $ 50 $ — $ 50 $ 174 $ 39 $ — $ — $ 313

Pass $ 599,124 $ 973,031 $ 266,055 $ 88,302 $ 66,837 $ 755,372 $ 81 $ — $ 2,748,802

43 unchanged sentences

As of December 31, 2023

Current period gross write-offs $ — $ — $ — $ 70 $ — $ — $ 18 $ — $ 88

Payment performance

3 unchanged sentences

Consumer other:

Current period gross write-offs $ 109 $ 8,843 $ 1,149 $ 11 $ 78 $ 239 $ — $ — $ 10,429

Payment performance

18 unchanged sentences

(In thousands) December 31, 2023 December 31, 2022

Non-Accrual $ 31,114 $ 35,326

$ 21,407 $ 31,114

Substandard Accruing 131,689 88,665

82 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Troubled Debt Restructuring Loans

The Company’s loan portfolio also includes certain loans that have been modified in a Troubled Debt Restructuring ("TDR"), where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties.

These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance, or other actions.

Certain TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months.

TDRs are evaluated individually for impairment and may result in a specific allowance amount allocated to an individual loan.

The following table presents activity in TDRs for the years ended December 31, 2022 and December 31, 2021:

(In thousands) Balance at Beginning of Period Principal Payments TDR Status Change Other Additions/(Reductions) Newly Identified TDRs Balance at End of Period

Modified Loans

Occasionally, the Company modifies loans to borrowers in financial distress by providing principal forgiveness, term extension, an other-than-insignificant payment delay or interest rate reduction.

When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses.

In some cases, the Company provides multiple types of concessions on one loan.

Typically, one type of concession, such as a term extension, is granted initially.

If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted.

For the loans included in the "combination" columns below, multiple types of modifications have been made on the same loan within the current reporting period.

The combination is at least two of the following:

a term extension and principal forgiveness, an other-than-insignificant payment delay and/or an interest rate reduction.

The following table presents the amortized cost basis of loans at December 31, 2023 that were both experiencing financial difficulty and modified during the year ended December 31, 2023, by class and by type of modification.

The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below:

(In thousands) Principal Forgiveness Payment Delay Term Extension Interest Rate Reduction Combination Term Extension and Principal Forgiveness Combination Term Extension and Interest Rate Reduction Total Class of Financing Receivable

Year ended December 31, 2023

8 unchanged sentences

Total $ — $ 34 $ 27,681 $ — $ — $ 3,609 0.35 %

(In thousands) Balance at Beginning of Period Principal Payments TDR Status Change Other Additions/(Reductions) Newly Identified TDRs Balance at End of Period

Year ended December 31, 2021

The Company has committed to lend additional amounts totaling $ 7.8 million to the borrowers included in the previous table.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

The following table presents the performance of such loans that have been modified in the last 12 months.

(In thousands) 30 - 59 Days Past Due 60 - 89 Days Past Due Greater Than 89 Days Past Due Total Past Due

December 31, 2023

Construction $ — $ — $ — $ —

7 unchanged sentences

Total $ 34 $ — $ — $ 34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents loans modified as TDRs that occurred during the years ended December 31, 2022, 2021, and 2020:

(dollars in thousands) Total

Year ended December 31, 2022

Number of loans 93

Pre-modification outstanding recorded investment $ 4,944

Post-modification outstanding recorded investment $ 4,944

Year ended December 31, 2021

Number of loans 18

Pre-modification outstanding recorded investment $ 26,759

Post-modification outstanding recorded investment $ 26,759

Year ended December 31, 2020

Number of loans 16

Pre-modification outstanding recorded investment $ 12,197

Post-modification outstanding recorded investment $ 12,197

The following table discloses the modifications for TDRs where a concession has been made within the previous 12 months, that then defaulted in the respective reporting period.

For the years ended 2022, there were two loans restructured that had subsequently defaulted during the reporting period.

For the year ended 2021, there were four loans restructured that had subsequently defaulted during the reporting period.

There were no TDRs for which there was a payment default within twelve months following the modification during the year ended 2020.

(dollars in thousands) Number of Loans Recorded Investment

Year ended December 31, 2022

Commercial and industrial 1 $ 105

Consumer other 1 $ 10

Total 2 $ 115

(dollars in thousands) Number of Loans Recorded Investment

Year ended December 31, 2021

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the year ended December 31, 2023:

(In thousands) Principal Forgiveness Weighted Average Interest Rate Reduction Weighted Average Term Extension (months)

Years ended December 31, 2023

Construction $ — — % 0

Commercial multifamily — — 0

Commercial real estate owner occupied — — 120

Commercial real estate non-owner occupied — 0.05 16

Commercial and industrial — 1.25 23

Total 4 $ 18,817

Residential real estate — — 0

Home equity — — 0

Consumer other — — 0

There were no loans that had a payment default during the years ended December 31, 2023 that were modified in the twelve months prior to that default to borrowers experiencing financial difficulty.

Upon the Company's determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or portion of the loan) is written off.

Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9 unchanged sentences

Premises and equipment, net $ 68,915 $ 85,217

Depreciation and amortization expense including discontinued operations for the years 2022, 2021, and 2020 amounted to $ 9.6 million, $ 11.0 million, and $ 12.5 million, respectively.

Depreciation and amortization expense for the years 2023, 2022, and 2021 amounted to $ 8.4 million, $ 9.6 million, and $ 11.0 million, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

35 unchanged sentences

The Bank earns fees for the servicing provided.

At years end 2022 and 2021, loans sold and serviced for others amounted to $ 1.5 billion and $ 1.6 billion, respectively.

For year ended 2020, loans sold and serviced for others from continuing operations amounted to $ 1.5 billion.

For year ended 2020, loans sold and serviced for others from discontinued operations amounted to $ 0.6 billion.

At years end 2023, 2022, and 2021, loans sold and serviced for others amounted to $ 1.4 billion, $ 1.5 billion, and $ 1.6 billion, respectively.

Loans serviced for others are not included in the accompanying Consolidated Balance Sheets.

The risks inherent in servicing assets relate primarily to changes in prepayments that result from shifts in interest rates.

For the years 2022 and 2021, contractually specified servicing fees were $ 5.5 million and $ 8.0 million, respectively, and are included as a component of loan related fees within non-interest income .

For the year 2020, contractually specified servicing fees from continuing operations were $ 5.5 million and are included as a component of loan related fees within non-interest income on the Consolidated Statements of Operations.

For the year 2020, contractually specified servicing fees from discontinued operations were $ 2.1 million and are included as a component of other income in Note 2 - Discontinued Operations.

For the years 2023, 2022, and 2021, contractually specified servicing fees were $ 6.7 million, $ 5.5 million, and $ 8.0 million, respectively, and are included as a component of loan related fees within non-interest income .

Refer to Note 19 - Fair Value Measurements for significant assumptions and inputs used in the valuation at year-end 2023.

36 unchanged sentences

Total short-term borrowings:

260,000 5.54 — —

Long-term borrowings:

14 unchanged sentences

No borrowings with the Federal Reserve Bank of Boston took place for the periods ended December 31, 2023 and December 31, 2022.

As a participant in the SBA Paycheck Protection Program ("PPP"), the Bank may pledge originated loans as collateral at face value to the Federal Reserve Bank of Boston for term financings.

As of December 31, 2022, the Bank had no pledged PPP loans.

The Bank's available borrowing capacity with the Federal Reserve Bank was $ 647.9 million and $ 511.0 million for the periods ended December 31, 2022 and December 31, 2021, respectively.

The Bank's available borrowing capacity with the Federal Reserve Bank was $ 1.5 billion and $ 0.6 billion for the periods ended December 31, 2023 and December 31, 2022, respectively.

Long-term FHLBB advances consist of advances with an original maturity of more than one year and are subject to

2 unchanged sentences

The advances outstanding at December 31, 2023 included amortizing advances totaling $ 4.2 million.

The advances outstanding at December 31, 2021 included callable advances totaling $ 10 million and amortizing advances totaling $ 3.3 million.

There were no callable advances outstanding at December 31, 2022.

The advances outstanding at December 31, 2022 included amortizing advances totaling $ 4.4 million.

All FHLBB borrowings, including the line of credit, are secured by a blanket security agreement on certain qualified collateral, principally all residential first mortgage loans and certain securities.

4 unchanged sentences

2024 $ 290,010 5.48 %

2025 90,000 5.01

2026 521 2.20

2027 158 2.00

2028 and beyond 4,534 0.34

5 unchanged sentences

The subordinated note includes reduction to the note principal balance of $ 1.7 million for unamortized debt issuance costs as of December 31, 2023.

In September 2022, the Company called the fifteen year subordinated notes that were issued in September 2012 in the amount of $ 75 million.

The Company holds 100 % of the common stock of Berkshire Hills Capital Trust I (“Trust I”) which is included in other assets with a cost of $ 0.5 million.

22 unchanged sentences

Derivative liabilities $ 75,957 $ 97,030

Collateral on interest rate swaps 25,520 —

Finance lease liabilities 8,681 9,306

3 unchanged sentences

Customer transaction clearing accounts 12,366 5,758

Allowance for credit losses on unfunded commitments 9,256 8,588

Other 37,016 34,821

43 unchanged sentences

Total recognized in net periodic pension cost recognized and other comprehensive income $ ( 403 ) $ ( 321 ) $ ( 764 )

The amounts in accumulated other comprehensive (loss)/income that have not yet been recognized as components of net periodic benefit cost are a net loss of $ 0.5 million, $ 0.7 million, and $ 1.3 million in 2022, 2021 and 2020, respectively.

The amounts in accumulated other comprehensive income/(loss) that have not yet been recognized as components of net periodic benefit cost are a net loss of $ 0.1 million, $ 0.5 million, and $ 0.7 million in 2023, 2022 and 2021, respectively.

The Company did not make any cash contributions to the pension trust during 2023 and 2022.

The Company does no t expect to make any cash contributions in 2024.

The amount expected to be amortized from other comprehensive income into net periodic pension cost over the next fiscal year is $ 6 thousand.

There is no gain/loss expected to be amortized from other comprehensive income into net periodic pension cost over the next fiscal year.

The principal actuarial assumptions used are as follows:

19 unchanged sentences

The fair value of the Plan’s assets by category within the fair value hierarchy are as follows at December 31, 2023 and December 31, 2022.

The Plan did not hold any assets classified as Level 3, nor were there any transfers.

During 2023, the Plan's equity mutual funds and fixed income mutual funds were transferred to Level 1 from Level 2 because they are actively traded and quoted prices were available.

The Plan did not hold any assets classified as Level 3.

December 31, 2023

5 unchanged sentences

International 828 828 —

Fixed Income - US Core 1,167 — 1,167

Fixed Income Mutual Funds:

Intermediate Duration 1,674 1,674 —

Equity Common/Collective Trusts:

Large-Cap 336 — 336

Cash Equivalents - money market 54 54 —

16 unchanged sentences

As a result of the Company's acquisition of SI Financial Group, Inc.

(“SIFI”), the Company participates in the Pentegra Defined Benefit Plan for Financial Institutions (the “Plan”), a tax-qualified defined benefit pension plan.

The Plan operates as a multiple-employer plan under ERISA and the Internal Revenue Code, and as a multi-employer plan for accounting purposes.

The Plan was frozen effective September 6, 2013.

(“SIFI”), the Company participates in the Pentegra Defined Benefit Plan for Financial Institutions (the “DB Plan”), a tax-qualified defined benefit pension plan.

The DB Plan operates as a multiple-employer plan under ERISA and the Internal Revenue Code, and as a multi-employer plan for accounting purposes.

The DB Plan was frozen effective September 6, 2013.

The Company made contributions of $ 136 thousand in 2023.

As of July 1, 2022, the Plan held assets with a market value of $ 4.3 million and liabilities with a market value of $ 5.9 million.

The funded status (market value of plan assets divided by funding target) of the Plan, was greater than 80 % as of July 1, 2022, as required by federal and state regulations.

Market value of the Plan's assets reflects contributions received through June 30, 2022.

There are no collective bargaining agreements in place that require contributions to the Plan by the Company.

The Plan is a single plan under the Internal Revenue Code and, as a result, all of the assets stand behind all of the liabilities.

As of July 1, 2023, the DB Plan held assets with a market value of $ 4.1 million and liabilities with a market value of $ 5.4 million.

The funded status (market value of plan assets divided by funding target) of the DB Plan, was 80 % as of July 1, 2023, as required by federal and state regulations.

Market value of the DB Plan's assets reflects contributions received through June 30, 2023.

There are no collective bargaining agreements in place that require contributions to the DB Plan by the Company.

The DB Plan is a single plan under the Internal Revenue Code and, as a result, all of the assets stand behind all of the liabilities.

Accordingly, contributions made by a participating employer may be used to provide benefits to participants of other participating employers.

8 unchanged sentences

Funding of the plan comes from Company paid insurance policies or direct payments.

At plan’s inception, a $ 558 thousand benefit obligation was recorded against equity representing the prior service cost of plan participants.

At the plan’s inception, a $ 558 thousand benefit obligation was recorded against equity representing the prior service cost of plan participants.

Information regarding the postretirement plans is as follows:

35 unchanged sentences

Total recognized in accumulated other comprehensive income $ 385 $ 347 $ 1,857

The amount expected to be amortized from other comprehensive (loss)/income into net periodic postretirement cost over the next fiscal year is $ 83 thousand.

The amount expected to be amortized from other comprehensive income/(loss) into net periodic postretirement cost over the next fiscal year is $ 60 thousand.

The discount rates used in the measurement of the postretirement plan obligations are determined by comparing the expected future retirement payment cash flows of the plans to the Above Median FTSE Pension Discount Curve as of the measurement date.

7 unchanged sentences

The Company provides a 401(k) Plan in which most eligible employees participate.

Expense related to the plan was $ 2.9 million in 2022, $ 3.2 million in 2021, and $ 3.5 million in 2020.

Expenses related to the plan were $ 3.1 million in 2023, $ 2.9 million in 2022, and $ 3.2 million in 2021.

The Company maintains supplemental executive retirement plans (“SERPs”) for select current and former executives.

2 unchanged sentences

At year-end 2023 and 2022, the accrued liability for these SERPs was $ 16.7 million and $ 19.4 million, respectively.

SERP expense was $ 2.0 million in 2022, $ 2.0 million in 2021, and $ 2.0 million in 2020, and is recognized over the required service period.

SERP (benefit)/expense was $( 1.0 ) million in 2023, $ 2.0 million in 2022, and $ 2.0 million in 2021, and is recognized over the required service period.

The Company has endorsement split-dollar arrangements pertaining to certain current and former executives and directors.

7 unchanged sentences

(In thousands) 2023 2022 2021

Federal tax expense/(benefit) $ 17,915 $ 17,340 $ ( 19,889 )

State tax expense/(benefit) 6,831 7,580 ( 3,976 )

Total current tax expense/(benefit) (1)

Federal tax expense $ 5,596 $ 17,915 $ 17,340

State tax expense 7,497 6,831 7,580

Total current tax expense (1)

13,093 24,746 24,920

Federal tax expense/(benefit) ( 2,274 ) 5,125 2,048

State tax expense/(benefit) ( 1,187 ) 112 1,964

Total deferred tax expense/(benefit) ( 3,461 ) 5,237 4,012

Federal tax (benefit)/expense ( 2,658 ) ( 2,274 ) 5,125

State tax (benefit)/expense ( 1,711 ) ( 1,187 ) 112

Total deferred tax (benefit)/expense ( 4,369 ) ( 3,461 ) 5,237

Change in valuation allowance — — 200

Income tax expense/(benefit) from continuing operations $ 21,285 $ 30,357 $ ( 19,853 )

Income tax (benefit) from discontinued operations — — ( 7,013 )

Total $ 21,285 $ 30,357 $ ( 26,866 )

(1) On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was signed into law.

The CARES Act includes several provisions that temporarily modify the corporate net operating loss (“NOL”) carryback rules for federal income tax purposes.

Specifically, the CARES Act allows a five-year carryback of any NOL generated in a taxable year beginning after December 31, 2017, and before January 1, 2021.

The Company recorded a $ 6 million federal income tax benefit in 2020, and an additional $ 500 thousand benefit in 2021 resulting from the carryback of its 2020 NOL to recover federal income taxes paid in 2015 through 2018 (at a 35% federal income tax rate for years 2015 through 2017).

Income tax expense $ 8,724 $ 21,285 $ 30,357

(1) The Company recorded an additional $ 500 thousand benefit in 2021 resulting from the carryback of its 2020 NOL to recover federal income taxes paid in 2015 through 2018 (at a 35% federal income tax rate for years 2015 through 2017).

Effective Tax Rate

7 unchanged sentences

Bank-owned life insurance ( 1,568 ) ( 2.0 ) ( 1,258 ) ( 1.1 ) ( 1,348 ) ( 0.9 )

Goodwill impairment — — — 103,912 ( 19.5 )

Tax credits, net of basis reduction ( 7,804 ) ( 10.0 ) ( 2,129 ) ( 1.9 ) ( 2,881 ) ( 1.9 )

25 unchanged sentences

Loan servicing rights $ ( 1,133 ) $ ( 1,212 )

Intangible amortization — ( 545 )

Unamortized tax credit reserve ( 1,661 ) ( 1,687 )

2 unchanged sentences

Deferred tax assets, net $ 110,068 $ 118,331

The Company’s net deferred tax asset increased by $ 65.7 million during 2022 and $ 62.3 million of this change is related to unrealized losses in OCI.

The Company’s net deferred tax asset decreased by $ 8.3 million during 2023 and $ 12.6 million of this change is related to unrealized losses in OCI.

Deferred tax assets, net of valuation allowances, are expected to be realized through the reversal of existing taxable temporary differences and future taxable income.

3 unchanged sentences

State valuation allowances $ ( 400 ) $ ( 400 )

The state tax basis difference, net of Federal benefit, was originally recorded in 2012, due to management’s assessment that it is more likely than not that certain deferred tax assets recorded for the difference between the book basis and the state tax basis in certain tax credit limited partnership investments (LPs) will not be realized.

Management anticipates that the remaining excess state tax basis will be realized as a capital loss upon disposition, and that it is unlikely that the Company will have capital gains against which to offset such capital losses.

The state tax valuation allowance, net of Federal benefit, was originally recorded in 2012, due to management's assessment that it is more likely than not that certain deferred tax assets recorded for the difference between the book basis and the state tax basis in certain tax credit limited partnership investments (LPs) will not be realized.

Management anticipates that the remaining excess state tax basis realized upon termination of these partnerships will be a capital loss upon disposition, and that capital loss may not be deductible in some of the Company's state tax jurisdictions.

The valuation allowance as of December 31, 2023 is subject to change in the future as the Company continues to periodically assess the likelihood of realizing its deferred tax assets.

1 unchanged sentence

Tax Attributes

At December 31, 2022, the Company has $ 1.5 million of federal net operating loss carryforwards, the utilization of which are limited under Internal Revenue Code Section 382.

At December 31, 2023, the Company has $ 491 thousand of federal net operating loss carryforwards, the utilization of which are limited under Internal Revenue Code Section 382.

These net operating losses begin to expire in 2029.

13 unchanged sentences

Unrecognized tax benefits at December 31 $ 1,824 $ 1,042 $ 1,025

It is reasonably possible that over the next twelve months the amount of unrecognized tax benefits may change from the reevaluation of uncertain tax positions arising in examinations, in appeals, or in the courts, or from the closure of tax statutes.The Company does not expect any significant changes in unrecognized tax benefits during the next twelve months.

The Company does not expect any significant changes in unrecognized tax benefits during the next twelve months.

All of the Company’s unrecognized tax benefits, if recognized, would be recorded as a component of income tax expense, therefore, affecting the effective tax rate.

6 unchanged sentences

Other than open statutes of limitation pertaining specifically to the amended returns filed for 2015 through 2018 to claim 2020 NOL carryback refunds, the Company is no longer subject to examination for tax years prior to 2020 including any related income tax filings from its recent acquisitions.

The Company is not under audit in any jurisdiction as of December 31, 2022.

The Company has been selected for an income tax audit in the state of Connecticut for tax years 2019, 2020, and 2021, as well as an income tax audit in the state of Wisconsin for tax years 2018, 2019, and 2020 .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11 unchanged sentences

The Company had pledged securities to derivative counterparties with an amortized cost of $ 9.8 million and a fair value of $ 9.6 million at year-end 2023.

At December 31, 2021, the Company pledged cash collateral of $ 43.7 million and securities with an amortized cost of $ 34.8 million and a fair value of $ 34.9 million.

The Company had no pledged collateral to derivative counterparties in the form of cash at year-end 2022.

The Company had pledged securities to derivative counterparties with an amortized cost of $ 12.0 million and a fair value of $ 12.0 million at year-end 2022.

The Company does not typically require its commercial customers to post cash or securities as collateral on its program of back-to-back economic hedges.

11 unchanged sentences

Interest rate swaps on commercial loans (1) $ 600,000 1.9 3.64 % 5.35 % $ —

Forward-starting interest rate swaps on commercial loans (1) 200,000 3.3 — % 3.90 % —

Interest rate collars on commercial loans 200,000 2.5 1,658

19 unchanged sentences

(In thousands) (In years) (In thousands)

Cash flow hedges:

Interest rate swaps on commercial loans (1) $ 400,000 2.7 4.09 % 3.51 % $ —

Forward-starting interest rate swaps on commercial loans (1) 200,000 3.3 — % 3.90 % —

Interest rate collars on commercial loans 200,000 3.5 1,937

Total cash flow hedges 800,000 1,937

Economic hedges:

12 unchanged sentences

Cash flow hedges

The effective portion of unrealized changes in the fair value of derivatives accounted for as cash flow hedges is reported in other comprehensive (loss)/income and subsequently reclassified to earnings in the same period or periods during which the hedged transaction is forecasted to affect earnings.

The effective portion of unrealized changes in the fair value of derivatives accounted for as cash flow hedges is reported in other comprehensive income/(loss) and subsequently reclassified to earnings in the same period or periods during which the hedged transaction is forecasted to affect earnings.

Each quarter, the Company assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged item or transaction.

1 unchanged sentence

All cash flow hedges are considered highly effective.

The Company has designated its interest rate collars as cash flow hedges.

The structure of these instruments is such that the Company pays the counterparty an incremental amount if the collar index exceeds the cap rate.

Conversely, the Company receives an incremental amount if the index falls below the floor rate.

No payments are required if the collar index falls between the cap and floor rates.

As of December 31, 2022, the Company had six interest rate swap contracts and two forward-starting interest rate swap contracts with a combined notional value of $ 600.0 million.

The two forward starting swaps will become effective in 2023.

The interest rate swaps have durations of two to four years .

As of December 31, 2023, the Company had eight interest rate swap contracts with a notional value of $ 600.0 million.

The interest rate swaps have durations of two to three years .

This hedge strategy converts commercial variable rate loans to fixed interest rates, thereby protecting the Company from floating interest rate variability.

In December 2022, the Company entered into two interest rate collars.

As of December 31, 2023, the Company had two interest rate collars.

The first interest rate collar has a 3.00 % floor and a 5.75 % cap with a notional value of $ 100.0 million.

4 unchanged sentences

No payments are required if the collar index falls between the cap and floor rates.

Amounts included in the Consolidated Statements of Operations and in the other comprehensive (loss)/income section of the Consolidated Statements of Comprehensive (Loss)/Income (related to interest rate derivatives designated as hedges of cash flows), were as follows:

Amounts included in the Consolidated Statements of Income and in the other comprehensive income/(loss) section of the Consolidated Statements of Comprehensive Income/(Loss) (related to interest rate derivatives designated as hedges of cash flows), were as follows:

Years Ended December 31,

1 unchanged sentence

Interest rate swaps and collars on commercial loans:

Unrealized (loss) recognized in accumulated other comprehensive loss $ ( 6,667 ) $ — $ —

Reclassification of unrealized (loss) from accumulated other comprehensive loss to interest expense — — —

Unrealized gain/(loss) recognized in accumulated other comprehensive loss $ 1,770 $ ( 6,667 ) $ —

Reclassification of unrealized (loss) from accumulated other comprehensive loss to interest income

Net tax benefit on items recognized in accumulated other comprehensive income ( 630 ) 1,789 —

Other comprehensive loss recorded in accumulated other comprehensive (loss)/income, net of reclassification adjustments and tax effects $ ( 4,878 ) $ — $ —

Net interest expense recognized in interest expense on hedged commercial loans $ ( 15 ) $ — $ —

Other comprehensive gain/(loss) recorded in accumulated other comprehensive income/(loss), net of reclassification adjustments and tax effects $ 1,772 $ ( 4,878 ) $ —

Net interest expense recognized on hedged commercial loans

$ 9,026 $ ( 15 ) $ —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Economic hedges

As of December 31, 2022 the Company has an interest rate swap with a $ 7.1 million notional amount to swap out the fixed rate of interest on an economic development bond bearing a fixed rate of 5.09 %, currently within the Company’s trading portfolio under the fair value option, in exchange for a LIBOR-based floating rate.

As of December 31, 2023 the Company has an interest rate swap with a $ 6.2 million notional amount to swap out the fixed rate of interest on an economic development bond bearing a fixed rate of 5.09 %, currently within the Company’s trading portfolio under the fair value option, in exchange for a SOFR-based floating rate.

The intent of the economic hedge is to improve the Company’s asset sensitivity to changing interest rates in anticipation of favorable average floating rates of interest over the 21 -year life of the bond.

28 unchanged sentences

Outstanding commitments expose the Company to the risk that the price of the mortgage loans underlying the commitments may decline due to increases in mortgage interest rates from inception of the rate lock to the funding of the loan.

The commitments are free-standing derivatives which are carried at fair value with changes recorded in non-interest income in the Company’s Consolidated Statements of Operations.

The commitments are free-standing derivatives which are carried at fair value with changes recorded in non-interest income in the Company’s Consolidated Statements of Income.

Changes in the fair value of commitments subsequent to inception are based on changes in the fair value of the underlying loan resulting from the fulfillment of the commitment and changes in the probability that the loan will fund within the terms of the commitment, which is affected primarily by changes in interest rates and the passage of time.

Amounts included in the Consolidated Statements of Operations related to economic hedges and non-hedging derivatives were as follows:

Amounts included in the Consolidated Statements of Income related to economic hedges and non-hedging derivatives were as follows:

Years Ended December 31,

4 unchanged sentences

Interest rate swaps on loans with commercial loan customers:

Unrealized (loss)/gain recognized in other non-interest income ( 171,272 ) ( 86,099 ) 85,206

Unrealized gain/(loss) recognized in other non-interest income 31,310 ( 171,272 ) ( 86,099 )

Favorable/(unfavorable) change in credit valuation adjustment recognized in other non-interest income — 1,809 1,431

Reverse interest rate swaps on loans with commercial loan customers:

Unrealized gain/(loss) recognized in other non-interest income 171,272 86,099 ( 85,206 )

Risk Participation Agreements:

Unrealized (loss)/gain recognized in other non-interest income ( 31,310 ) 171,272 86,099

Risk Participation Agreements:

Unrealized (loss) recognized in other non-interest income ( 74 ) ( 521 ) ( 233 )

Forward Commitments:

Unrealized (loss)/gain recognized in other non-interest income ( 126 ) ( 186 ) —

Unrealized (loss)/gain recognized in discontinued operations — — 547

Realized (loss) in discontinued operations — — ( 8,205 )

Unrealized gain/(loss) recognized in other non-interest income 13 ( 126 ) ( 186 )

Non-hedging derivatives

Commitments to lend:

Unrealized (loss) recognized in other non-interest income $ ( 107 ) $ ( 611 ) $ —

Unrealized (loss) recognized in discontinued operations — — ( 1,893 )

Unrealized gain/(loss) recognized in other non-interest income $ 17 $ ( 107 ) $ ( 611 )

Realized gain in other non-interest income 536 462 2,854

Realized gain in discontinued operations — — 15,672

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12 unchanged sentences

The Company had net liability positions with its commercial banking counterparties totaling $ 69.8 million and $ 96.1 million as of December 31, 2023 and December 31, 2022, respectively.

The Company has collateral pledged to cover this liability.

The following table presents the assets and liabilities subject to an enforceable master netting arrangement as of December 31, 2023 and December 31, 2022:

89 unchanged sentences

Variable lease components, such as consumer price index adjustments, are expensed as incurred and not included in ROU assets and operating lease liabilities.

Lease expense for operating leases for the year ended December 31, 2020 was $ 13.5 million, of which $ 1.2 million was related to FCLS and is reported as discontinued operations.

Lease expense for operating leases for the year ended December 31, 2021 was $ 10.9 million.

Variable lease components, such as consumer price index adjustments, are expensed as incurred and not included in ROU assets and operating lease liabilities.

22 unchanged sentences

OTHER COMMITMENTS, CONTINGENCIES, AND OFF-BALANCE SHEET ACTIVITIES

In March 2020, the World Health Organization declared a novel strain of coronavirus ("COVID-19") a global pandemic and the United States declared a National Public Health Emergency.

The impact of the COVID-19 pandemic is fluid and continues to evolve, which is adversely affecting some of the Company’s clients.

The continuing impact of the COVID-19 pandemic on the Company’s business, financial condition and results of operations is currently uncertain and will depend on various developments and other factors, including, among others, the duration and scope of the pandemic, as well as governmental, regulatory and private sector responses to the pandemic, and the associated impacts on the economy, financial markets, and our clients, employees, and vendors.

The Company’s business, financial condition and results of operations generally rely upon the ability of the Company’s borrowers to repay their loans, the value of collateral underlying the Company’s secured loans, and demand for loans and other products and services the Company offers, which are highly dependent on the business environment in the Company’s primary markets where it operates and in the United States as a whole.

These circumstances could cause the Company to experience a material adverse effect on our business operations, asset valuations, financial condition, results of operations and prospects.

Material adverse impacts may include all or a combination of valuation impairments on the Company’s intangible assets, investments, loans, loan servicing rights, deferred tax assets, lease right-of-use assets, or counter-party risk derivatives.

Beginning in March 2020, the Company offered three-month payment deferrals for customers with a current payment status who were negatively impacted by economic disruption caused by the COVID-19 pandemic.

As of December 31, 2022, the Company had 1 active modified loan outstanding with a carrying value of $ 12.4 million.

As of December 31, 2021, the Company had 19 active modified loans outstanding with a carrying value of $ 14.4 million, which excluded loans returning to payment or awaiting evaluation for further deferral.

The Company continues to accrue interest on these loans during the deferral period.

In accordance with interagency guidance issued in March 2020 and Section 4013 (Temporary Relief from Troubled Debt Restructurings) of the CARES Act, these short-term deferrals are not considered troubled debt restructurings (“TDRs”) unless the borrower was previously experiencing financial difficulty.

In addition, the risk-ratings on COVID-19 modified loans did not automatically change as a result of payment deferrals, and these loans will not be considered past due until after the deferral period is over and scheduled payments resume.

Section 4013 (Temporary Relief from Troubled Debt Restructurings) of the CARES Act expired on December 31, 2021.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Credit Related Financial Instruments.

21 unchanged sentences

The Company considers standby letters of credit to be guarantees and the amount of the recorded liability related to such guarantees was not material at year-end 2023 and 2022.

The Company has 28.9 million of commitments remaining for tax credit investments as of December 31, 2023.

Employment and Change in Control Agreements.

54 unchanged sentences

The total of all dividends shall not exceed the Bank’s net income for the current year (as defined by statute), plus the Bank’s net income retained for the two previous years, without regulatory approval.

Dividends from the Bank are an important source of funds to the Company to make dividend payments on its common and preferred stock, to make payments on its borrowings, and for its other cash needs.

Dividends from the Bank are an important source of funds to the Company to make dividend payments on its common, to make payments on its borrowings, and for its other cash needs.

The ability of the Company and the Bank to pay dividends is dependent on regulatory policies and regulatory capital requirements.

2 unchanged sentences

Accumulated other comprehensive income

Year-end components of accumulated other comprehensive (loss)/income are as follows:

Year-end components of accumulated other comprehensive (loss) are as follows:

(In thousands) 2023 2022

3 unchanged sentences

Net unrealized holding (loss) on pension plans ( 528 ) ( 844 )

Income taxes related to items of accumulated other comprehensive (loss)/income:

Income taxes related to items of accumulated other comprehensive (loss):

Net unrealized holding loss on AFS securities 49,401 61,329

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the components of other comprehensive (loss)/income for the years ended December 31, 2022, 2021, and 2020:

The following table presents the components of other comprehensive income/(loss) for the years ended December 31, 2023, 2022, and 2021:

(In thousands) Before Tax Tax Effect Net of Tax

Year Ended December 31, 2023

Net unrealized holding (loss) on AFS securities:

Net unrealized (loss) arising during the period $ ( 235,075 ) $ 60,920 $ ( 174,155 )

Net unrealized holding gain on AFS securities:

Net unrealized gain arising during the period $ 22,903 $ ( 5,122 ) $ 17,781

reclassification adjustment for (losses) realized in net income ( 25,057 ) 6,806 ( 18,251 )

Net unrealized holding (loss) on AFS securities ( 235,081 ) 60,922 ( 174,159 )

Net loss on cash flow hedging derivatives:

Net unrealized holding gain on AFS securities 47,960 ( 11,928 ) 36,032

Net gain on cash flow hedging derivatives:

Net unrealized gain arising during the period 1,770 ( 458 ) 1,312

reclassification adjustment for (losses) realized in net income ( 632 ) 172 ( 460 )

Net (loss) on cash flow hedging derivatives ( 6,667 ) 1,789 ( 4,878 )

Net unrealized holding (loss) on pension plans

Net gain on cash flow hedging derivatives 2,402 ( 630 ) 1,772

Net unrealized holding gain on pension plans

Net unrealized gain arising during the period 316 ( 84 ) 232

reclassification adjustment for (losses) realized in net income — — —

Net unrealized holding (loss) on pension plans 1,674 ( 446 ) 1,228

Other comprehensive loss $ ( 240,074 ) $ 62,265 $ ( 177,809 )

Net unrealized holding gain on pension plans 316 ( 84 ) 232

Other comprehensive income $ 50,678 $ ( 12,642 ) $ 38,036

(In thousands) Before Tax Tax Effect Net of Tax

4 unchanged sentences

Net unrealized holding (loss) on AFS securities ( 235,081 ) 60,922 ( 174,159 )

Net unrealized holding (loss) on pension plans

Net (loss) on cash flow hedging derivatives:

Net unrealized (loss) arising during the period ( 6,667 ) 1,789 ( 4,878 )

reclassification adjustment for (losses) realized in net income — — —

Net unrealized holding (loss) on pension plans 993 ( 250 ) 743

Net (loss) on cash flow hedging derivatives ( 6,667 ) 1,789 ( 4,878 )

Net unrealized holding gain on pension plans

Net unrealized gain arising during the period 1,674 ( 446 ) 1,228

reclassification adjustment for (losses) realized in net income — — —

Net unrealized holding gain on pension plans 1,674 ( 446 ) 1,228

Other comprehensive (loss) $ ( 240,074 ) $ 62,265 $ ( 177,809 )

1 unchanged sentence

Year Ended December 31, 2021

Net unrealized holding gain on AFS securities:

Net unrealized gain arising during the period $ 25,721 $ ( 6,470 ) $ 19,251

reclassification adjustment for gains realized in net income ( 5 ) 1 ( 4 )

Net unrealized holding gain on AFS securities 25,726 ( 6,471 ) 19,255

Net unrealized holding (loss) on pension plans

Net unrealized holding (loss) on AFS securities:

Net unrealized (loss) arising during the period $ ( 46,794 ) $ 11,937 $ ( 34,857 )

reclassification adjustment for gains realized in net income — — —

Net unrealized holding (loss) on AFS securities ( 46,794 ) 11,937 ( 34,857 )

Net unrealized holding gain on pension plans

Net unrealized gain arising during the period 993 ( 250 ) 743

reclassification adjustment for (losses) realized in net income — — —

Net unrealized holding loss on pension plans ( 489 ) 112 ( 377 )

Other comprehensive income $ 25,237 $ ( 6,359 ) $ 18,878

Net unrealized holding gain on pension plans 993 ( 250 ) 743

Other comprehensive (loss) $ ( 45,801 ) $ 11,687 $ ( 34,114 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3 unchanged sentences

Balance at Beginning of Year $ ( 175,557 ) $ ( 4,878 ) $ ( 617 ) $ ( 181,052 )

Other comprehensive (loss)/income before reclassifications ( 174,155 ) ( 4,878 ) 1,228 ( 177,805 )

Other comprehensive income before reclassifications

17,781 1,312 232 19,325

Amounts reclassified from accumulated other comprehensive income ( 18,251 ) ( 460 ) — ( 18,711 )

Total other comprehensive (loss)/income ( 174,159 ) ( 4,878 ) 1,228 ( 177,809 )

Total other comprehensive income

36,032 1,772 232 38,036

Balance at End of Period $ ( 139,525 ) $ ( 3,106 ) $ ( 385 ) $ ( 143,016 )

1 unchanged sentence

Balance at Beginning of Year $ ( 1,398 ) $ — $ ( 1,845 ) $ ( 3,243 )

Other comprehensive income/(loss)/income before reclassifications ( 34,857 ) — 743 ( 34,114 )

Other comprehensive (loss)/income before reclassifications

( 174,155 ) ( 4,878 ) 1,228 ( 177,805 )

Amounts reclassified from accumulated other comprehensive income 4 — — 4

3 unchanged sentences

Balance at Beginning of Year $ 33,459 $ — $ ( 2,588 ) $ 30,871

Other comprehensive income/(loss) before reclassifications 19,251 — ( 377 ) 18,874

Other comprehensive (loss)/income before reclassifications

( 34,857 ) — 743 ( 34,114 )

Amounts reclassified from accumulated other comprehensive income — — — —

Total other comprehensive income/(loss) 19,255 — ( 377 ) 18,878

Total other comprehensive (loss)/income

( 34,857 ) — 743 ( 34,114 )

Balance at End of Period $ ( 1,398 ) $ — $ ( 1,845 ) $ ( 3,243 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the amounts reclassified out of each component of accumulated other comprehensive (loss)/income for the years ended December 31, 2022, 2021, and 2020:

The following table presents the amounts reclassified out of each component of accumulated other comprehensive income/(loss) for the years ended December 31, 2023, 2022, and 2021:

Affected Line Item in the

2 unchanged sentences

(in thousands) 2023 2022 2021

Realized gains/(losses) on AFS securities:

Realized (losses)/gains on AFS securities:

$ ( 25,057 ) $ 6 $ — Non-interest income

6,806 ( 2 ) — Tax expense

( 18,251 ) 4 —

Realized (losses) on cash flow hedging derivatives:

( 632 ) — — Interest expense

— — — Non-interest income

— — — Non-interest expense

5 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Earnings/(Loss) Per Common Share

Basic earnings/(loss) per common share (“EPS”) excludes dilution and is computed by dividing net income applicable to common stock by the weighted average number of common shares outstanding for the year.

Earnings Per Common Share

Basic earnings per common share (“EPS”) excludes dilution and is computed by dividing net income applicable to common stock by the weighted average number of common shares outstanding for the year.

Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock (such as stock options) were exercised or converted into additional common shares that would then share in the earnings of the entity.

Diluted EPS is computed by dividing net income applicable to common stock by the weighted average number of common shares outstanding for the year, plus an incremental number of common-equivalent shares computed using the treasury stock method.

Earnings/(loss) per common share has been computed based on the following (average diluted shares outstanding is calculated using the treasury stock method):

Earnings per common share has been computed based on the following (average diluted shares outstanding is calculated using the treasury stock method):

Years Ended December 31,

(In thousands, except per share data) 2023 2022 2021

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 )

Net income $ 69,598 $ 92,533 $ 118,664

Average number of common shares issued 51,903 51,903 51,903

1 unchanged sentence

average number of unvested stock award shares 795 762 712

average participating preferred shares — — 441

Average number of basic common shares outstanding 43,288 45,564 49,240

2 unchanged sentences

Average number of diluted common shares outstanding 43,504 45,914 49,554

Basic earnings/(loss) per share:

Continuing Operations $ 2.03 $ 2.41 $ ( 10.21 )

Discontinued operations — — ( 0.39 )

Basic earnings/(loss) per common share $ 2.03 $ 2.41 $ ( 10.60 )

Diluted earnings/(loss) per share:

Continuing Operations $ 2.02 $ 2.39 $ ( 10.21 )

Discontinued operations — — ( 0.39 )

Diluted earnings/(loss) per common share $ 2.02 $ 2.39 $ ( 10.60 )

For the year ended 2022, 64 thousand options were anti-dilutive and therefore excluded from the earnings per share calculations.For the year ended 2021, 88 thousand options were anti-dilutive and therefore excluded from the earnings per share calculations.

Due to the net loss in 2020, all unvested restricted stock and options were considered anti-dilutive and therefore excluded from the earnings per share calculations.

Basic earnings per common share $ 1.61 $ 2.03 $ 2.41

Diluted earnings per common share $ 1.60 $ 2.02 $ 2.39

For the year ended 2023, 49 thousand options were anti-dilutive and therefore excluded from the earnings per share calculations.

For the year ended 2022, 64 thousand options were anti-dilutive and therefore excluded from the earnings per share calculations.

For the year ended 2021, 88 thousand options were anti-dilutive and therefore excluded from the earnings per share calculations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12 unchanged sentences

Granted 446 26.18 — —

Acquired — — — —

Stock options exercised — — — —

15 unchanged sentences

The options grant the holder the right to acquire a share of the Company’s common stock for each option held, and have a contractual life of ten years .

As of year-end 2022, the weighted average remaining contractual term for options outstanding is three years .

As of year-end 2023, the weighted average remaining contractual term for options outstanding is two years .

The Company generally issues shares from treasury stock as options are exercised.

5 unchanged sentences

The Company did not grant options during 2023 and 2022.

The total intrinsic value of options exercised was $ 62 thousand, $ 102 thousand, and $ 246 thousand for the years 2022, 2021, and 2020, respectively.

There were no options exercised during 2023.

The total intrinsic value of options exercised was $ 62 thousand and $ 102 thousand for the years 2022 and 2021, respectively.

The expense pertaining to options vesting was $ 1 thousand, $ 13 thousand, and $ 14 thousand for the years 2023, 2022, and 2021, respectively.

The tax benefit associated with stock option expense for 2023, 2022, and 2021 was $ 0.2 thousand, $ 3 thousand, and $ 4 thousand, respectively.

The unrecognized stock-based compensation expense related to unvested stock options as of year-end 2022, 2021 and 2020 was $ 1 thousand, $ 14 thousand, and $ 27 thousand, respectively.

As of December 31, 2023, there was no unrecognized stock-based compensation expense related to unvested stock options.

The unrecognized stock-based compensation expense related to unvested stock options as of year-end 2022 and 2021 was $ 1 thousand and $ 14 thousand, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

These valuation methodologies were applied to all of the Company’s financial assets and financial liabilities that are carried at fair value, including assets classified as discontinued operations on the consolidated balance sheets.

These valuation methodologies were applied to all of the Company’s financial assets and financial liabilities that are carried at fair value.

Recurring Fair Value Measurements of Financial Instruments

20 unchanged sentences

December 31, 2022

Level 1 Level 2 Level 3 Total

(In thousands) Inputs Inputs Inputs Fair Value

Inputs Level 2

Inputs Level 3

(In thousands)

Trading security $ — $ — $ 6,708 $ 6,708

6 unchanged sentences

Corporate bonds — 36,510 4,000 40,510

Other bonds and obligations — 656 656

Marketable equity securities 12,856 — — 12,856

5 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the year ended December 31, 2022, there were no transfers between Level 1, 2 and 3.

During the years ended December 31, 2023 and December 31, 2022, there were no transfers between Level 1, 2 and 3.

During the year ended December 31, 2021, the Company had one transfer totaling $ 4.0 million in corporate bonds from Level 2 to Level 3 based on recent inactivity in the market related to pricing information for similar bonds.

During the year ended December 31, 2022, there were no transfers between Level 1, 2 and 3.

Trading Security at Fair Value.

32 unchanged sentences

Loans held for investment at fair value $ 605 $ 10,948 $ ( 10,343 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Loans held for sale.

13 unchanged sentences

Loans held for sale $ 942 $ 927 $ 15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The changes in fair value of loans held for sale for the year ended December 31, 2022 were losses of $ 169 thousand.

The changes in fair value of loans held for sale for the year ended December 31, 2023 were gains of $ 17 thousand.

The changes in fair value of loans held for sale for the year ended December 31, 2022 were losses of $ 169 thousand.

The changes in fair value of loans held for sale for the year ended December 31, 2020 were gains of $ 212 thousand from continuing operations and gains of $ 3.0 million from discontinued operations.

The changes in fair value of loans held for sale for the year ended December 31, 2021 were gains of $ 169 thousand.

During 2023, originations of loans held for sale totaled $ 85 million and sales of loans originated for sale totaled $ 84 million.

During 2022, originations of loans held for sale totaled $ 20 million and sales of loans originated for sale totaled $ 25 million.

During 2020, originations of loans held for sale from continuing operations totaled $ 150 million and sales of loans originated for sale from continuing operations totaled $ 141 million.

During 2020, originations of loans held for sale from discontinued operations totaled $ 624 million and sales of loans originated for sale from discontinued operations totaled $ 755 million.

During 2021, originations of loans held for sale totaled $ 104 million and sales of loans originated for sale totaled $ 108 million.

Interest Rate Swaps.

17 unchanged sentences

The fair values of the Company’s best efforts and mandatory delivery loan sale commitments are determined similarly to the commitments to lend using quoted prices in the market place that are observable.

However, costs to originate and closing ratios included in the calculation are internally generated and are based on management’s judgment and prior experience, which are considered factors that are not observable.

However, costs to originate and closing ratios included in the calculation are internally generated and

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

are based on management’s judgment and prior experience, which are considered factors that are not observable.

As such, best efforts and mandatory forward sale commitments are classified as Level 3 measurements.

3 unchanged sentences

The fair value of servicing rights is estimated using a present value cash flow model.

The most important assumptions used

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

in the valuation model are the anticipated rate of the loan prepayments and discount rates.

The most important assumptions used in the valuation model are the anticipated rate of the loan prepayments and discount rates.

Although some assumptions in determining fair value are based on standards used by market participants, some are based on unobservable inputs and therefore are classified in Level 3 of the valuation hierarchy.

5 unchanged sentences

Balance as of December 31, 2021 $ 8,354 $ 4,030 $ 1,200 $ 124 $ 134 $ 1,966

Maturities, calls, and prepayments of AFS Security — ( 15,000 ) — — — —

Unrealized (loss) gain, net recognized in other non-interest income ( 828 ) — 314 200 ( 126 ) ( 120 )

Unrealized gain included in accumulated other comprehensive loss — 30 — — — —

Transfers to Level 3 — 4,000 — — — —

Unrealized (loss) included in accumulated other comprehensive loss — ( 30 ) — — — —

Paydown of asset ( 818 ) — ( 909 ) — — —

Transfers to loans held for sale — — — ( 307 ) — —

Additions to servicing rights — — — — — —

Balance as of December 31, 2022 $ 6,708 $ 4,000 $ 605 $ 17 $ 8 $ 1,846

Maturities, calls, and prepayments of AFS Security $ — $ — $ — $ — $ —

Unrealized (loss) gain, net recognized in other non-interest income ( 828 ) — 314 200 ( 126 ) ( 120 )

Unrealized gain (loss), net recognized in other non-interest income 294 — ( 128 ) 305 13 ( 320 )

Unrealized (loss) in included in accumulated other comprehensive loss — ( 77 ) — — — —

Transfers to Level 3 — — — — — —

Paydown of asset ( 860 ) — ( 103 ) — — —

Transfers to loans held for sale — — ( 288 ) — —

Additions to servicing rights — — — — —

Balance as of December 31, 2023 $ 6,142 $ 3,923 $ 374 $ 34 $ 21 $ 1,526

Unrealized gains/(losses) relating to instruments still held at December 31, 2022 $ ( 354 ) $ — $ — $ 17 $ 8 $ —

Unrealized gains/(losses) relating to instruments still held at December 31, 2021 $ 475 $ 30 $ — $ 124 $ 134 $ —

Unrealized (losses)/gains relating to instruments still held at December 31, 2023 $ ( 60 ) $ ( 77 ) $ — $ 34 $ 21 $ —

Unrealized (losses)/gains relating to instruments still held at December 31, 2022 $ ( 354 ) $ — $ — $ 17 $ 8 $ —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

36 unchanged sentences

Individually evaluated loans $ 4,395 December 2023

Loans held for sale 3,369 December 2022

Capitalized servicing rights 10,569 December 2023

4 unchanged sentences

Individually evaluated loans $ 14,571 December 2022

Loans held for sale $ 3,369 December 2022

Capitalized servicing rights 11,201 December 2022

4 unchanged sentences

Appraised value $ 0 to $ 3,389 ($ 2,774 )

Loans held for sale 3,369 Fair value of collateral Appraised value 3,369

Capitalized servicing rights 10,569 Discounted cash flow Constant prepayment rate (CPR) 5.43 % to 17.15 % 12.31 %

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands) December 31, 2021 Valuation Techniques Unobservable Inputs

Assets Range (Weighted Average) (a)

Individually evaluated loans $ 12,482 Fair value of collateral Loss severity ( 35.96 )% to 133.09 % ( 49.14 %)

(in thousands) December 31, 2022 Valuation Techniques Unobservable Inputs Range (Weighted Average) (a)

Individually evaluated loans $ 14,571 Fair value of collateral Discounted Cash Flow- Loss Severity ( 100.00 )% to 74.74 % (( 40.02 )%)

Appraised value $ 0 to $ 2,160 ($ 643 )

Loans held for sale 3,369 Fair value of collateral Appraised value $ 3,369

Capitalized servicing rights 11,201 Discounted cash flow Constant prepayment rate (CPR) 5.81 % to 13.18 % ( 10.94 %)

30 unchanged sentences

Accordingly, the aggregate fair value amounts presented herein may not necessarily represent the underlying fair value of the Company.

Certain assets and liabilities in the following disclosures include balances classified as discontinued operations.

December 31, 2023

16 unchanged sentences

Subordinated notes 121,363 98,138 — 98,138 —

Accrued interest payable 13,766 13,766 — 13,766 —

Derivative liabilities 75,957 75,957 — 75,957 —

12 unchanged sentences

Derivative assets 54,241 54,241 — 54,216 25

Assets held for sale — — — — —

Financial Liabilities

3 unchanged sentences

Subordinated notes 121,064 110,853 — 110,853 —

Accrued interest payable 1,610 1,610 — 1,610 —

Derivative liabilities 97,030 97,030 — 97,030 —

13 unchanged sentences

Total liabilities and shareholders’ equity $ 1,136,890 $ 1,078,272

CONDENSED STATEMENTS OF OPERATIONS

CONDENSED STATEMENTS OF INCOME

Years Ended December 31,

10 unchanged sentences

Equity in undistributed results of operations of subsidiaries 14,447 ( 8,278 ) 6,609

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 )

Comprehensive (loss)/income $ ( 85,276 ) $ 84,550 $ ( 514,139 )

Net income 69,598 92,533 118,664

Comprehensive income/(loss) $ 107,634 $ ( 85,276 ) $ 84,550

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3 unchanged sentences

Cash flows from operating activities:

Net income/(loss) $ 92,533 $ 118,664 $ ( 533,017 )

Adjustments to reconcile net income to net cash provided/(used) by operating activities:

Net income $ 69,598 $ 92,533 $ 118,664

Adjustments to reconcile net income to net cash provided by operating activities:

Equity in undistributed results of operations of subsidiaries ( 14,447 ) 8,278 ( 6,609 )

2 unchanged sentences

Cash flows from investing activities:

Advances to subsidiaries — — —

Purchase of securities — — ( 489 )

Sale of securities — — 167

Other, net — — —

Net cash provided by investing activities — — 167

3 unchanged sentences

Repayment of long term debt — ( 75,000 ) —

Net proceeds from common stock — — —

Payment to repurchase common stock ( 23,844 ) ( 124,519 ) ( 68,712 )

Common stock cash dividends paid ( 31,707 ) ( 24,527 ) ( 24,553 )

Preferred stock cash dividends paid — — ( 313 )

Other, net 142 281 431

15 unchanged sentences

Income before income taxes ( 5,954 ) 23,286 27,805 33,185 35,732 23,658 29,234 25,194

Income tax expense 5,227 4,941 6,119 4,998 4,066 15,794 6,896 3,601

Income tax (benefit)/expense ( 4,509 ) 3,741 3,944 5,548 5,227 4,941 6,119 4,998

Net income $ ( 1,445 ) $ 19,545 $ 23,861 $ 27,637 $ 30,505 $ 18,717 $ 23,115 $ 20,196

14 unchanged sentences

Total non-interest expense 301,508 288,716 285,893

Income/(loss) from continuing operations before income taxes 113,818 149,021 ( 533,028 )

Income tax expense/(benefit) 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) — — ( 7,013 )

Net (loss) from discontinued operations — — ( 19,842 )

Net income/(loss) $ 92,533 $ 118,664 $ ( 533,017 )

Income before income taxes 78,322 113,818 149,021

Income tax expense 8,724 21,285 30,357

Net income 69,598 92,533 118,664

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

18 unchanged sentences

Insurance commissions and fees

— 7,003 10,770

Non-interest income (in-scope of Topic 606)

2 unchanged sentences

30 28,063 97,145

Total non-interest income from continuing operations $ 68,937 $ 143,248 $ 66,307

Total non-interest income $ 42,782 $ 68,937 $ 143,248

Non-interest income streams in-scope of Topic 606 are discussed below.

24 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures