What changed in this filing

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Item 1. Business

2025-03-03 compared with 2024-02-28 · 77 added, 181 removed, 598 unchanged (30% of the section changed)

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You can identify these statements from the use of the words “may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “target” and similar expressions.

These forward-looking statements are subject to significant risks, assumptions and uncertainties, including among other things, changes in general economic and business conditions, increased competitive pressures, changes in the interest rate environment and inflation, legislative and regulatory change, changes in the financial markets, and other risks and uncertainties disclosed from time to time in documents that Berkshire Hills Bancorp files with the Securities and Exchange Commission, including the Risk Factors in Item 1A of this report.

These forward-looking statements are subject to significant risks, assumptions and uncertainties, including among other things, factors related to the pending merger between Berkshire Hills Bancorp, Inc.

(“Berkshire” or “the Company”) and Brookline Bancorp, Inc., including delays or impediments to completing the transaction, legal proceedings that may be instituted against the Company, expenses associated with the transaction, restrictions on Berkshire’s business during the pendency of the transaction, diversion of management’s attention from other business operations and opportunities, reactions of customers and employees to the transaction, challenges integrating the companies, and any failure to realize anticipated benefits of the transaction, and other factors such as changes in general economic and business conditions, increased competitive pressures, changes in the interest rate environment and inflation, legislative and regulatory change, changes in the financial markets, and other risks and uncertainties disclosed from time to time in documents that Berkshire files with the Securities and Exchange Commission, including the Risk Factors in Item 1A of this report.

Because of these and other uncertainties, Berkshire’s actual results, performance or achievements, or industry results, may be materially different from the results indicated by these forward-looking statements.

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Berkshire Hills Bancorp, Inc.

(“Berkshire” or “the Company”) is headquartered in Boston, Massachusetts.

is headquartered in Boston, Massachusetts.

Berkshire is a Delaware corporation and the holding company for Berkshire Bank (“the Bank”).

provides Commercial Banking, Retail Banking, Consumer Lending, Private Banking and Wealth Management services.

The Bank provides Commercial Banking, Retail Banking, Consumer Lending, Private Banking and Wealth Management services.

At year-end 2024, the Bank had $12.3 billion in assets and 83 full-service financial centers in its New England and New York footprint.

On December 16, 2024, the Company entered into a definitive agreement (“the Agreement”) for a merger of equals with Brookline Bancorp, Inc.

(“Brookline”) the parent company of Brookline Bank, Bank Rhode Island, and PCSB Bank.

Pursuant to the Agreement, Brookline will merge with and into Berkshire in an all-stock transaction valued at approximately $1.1 billion, or $12.68 per share of Brookline common stock, based on the $30.20 closing price of Berkshire common stock on December 13, 2024.

Under the terms of the Agreement, each outstanding share of Brookline common stock will be exchanged for the right to receive 0.42 shares of Berkshire common stock.

As a result of the transaction and a $100 million Berkshire common stock offering conducted to support the transaction, Berkshire shareholders will own approximately 55% (including the investors in the Berkshire common stock offering) and Brookline shareholders will own approximately 45% of the outstanding shares of the combined company.

The combined company will trade on the New York Stock Exchange and will announce a new name and ticker symbol prior to closing.

The combined bank will also operate under a new name to be announced prior to closing.

The executive headquarters for the combined company will be located at 131 Clarendon Street in Boston, MA, with operations centers located throughout the Northeast.

The transaction is expected to close by the end of the second half of 2025, subject to satisfaction of customary closing conditions, including receipt of required regulatory approvals and approvals from Berkshire and Brookline shareholders.

Information regarding the Company is available through the Investor Relations tab at berkshirebank.com.

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The Company seeks to differentiate itself with its Digitouch SM approach to personal service and user-friendly technology, as well as its commitment to corporate responsibility.

The Company recently introduced its new brand theme of “Where You Bank Matters” to highlight these differentiating factors.

The Company's brand theme of “Where You Bank Matters” is targeted to highlight these differentiating factors.

LENDING ACTIVITIES

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The following table sets forth the year-end composition of the Bank’s loan portfolio in dollar amounts and as a percentage of the portfolio at the dates indicated.

Further information about the composition of the loan portfolio is contained in Note 6 – Loans of the Consolidated Financial Statements.

Further information about the composition of the loan portfolio is contained in Note 5 – Loans and Related Allowances for Credit Losses.

Item 1 – Table 1 – – Loan Portfolio Analysis

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As part of its business activities, the Bank also enters into commercial loan participations and interest rate swaps.

Commercial real estate is generally managed within federal regulatory monitoring guidelines of 300% of capital, with construction loans within 100% of capital, as defined in the guidance.

Total supervisory commercial real estate loans measured 287% of regulatory capital at year-end 2023 and construction real estate loans measured 43% of regulatory capital as defined in accordance with regulatory monitory guidelines.

The Bank has hold limits for numerous categories of commercial lending including healthcare, hospitality, retail, and construction.

Commercial real estate loans are among the largest of the Bank’s loans, and may have higher credit risk than the overall credit portfolio.

Because repayment is often dependent on the successful operation or management of the properties, repayment of commercial real estate loans may be affected by adverse conditions in the real estate market or the economy.

The Bank seeks to manage these risks through its underwriting disciplines and portfolio management processes.

The Bank generally requires that borrowers have debt service coverage ratios (the ratio of available cash flows before debt service to debt service) of at least 1.25 times based on stabilized cash flows of leases in place, with some exceptions for national credit tenants.

For adjustable rate loans, the Bank’s underwriting stresses debt service coverage to interest rate shocks of 400 basis points or higher based on a minimum of 1.0 times coverage and it uses loan maturities to manage risk based on the lease base and interest sensitivity.

Loans at origination may be made up to 80% of appraised value based on property type and risk, with sublimits of 75% or less for designated industry types.

Generally, commercial real estate loans are supported by full or partial personal guarantees by the principals.

The economic environment in 2023 was affected by higher interest rates as a result of federal monetary policy.

An environment of higher interest rates can affect overall property values and operating debt service coverage across the spectrum of commercial real estate.

Additionally, there have been changes in supply and demand factors in commercial real estate following the pandemic.

Most prominently, metropolitan office properties have reported higher vacancy rates in many markets across the nation due to the shift towards work from home, with lower demand for office space in some markets.

Loans that are scheduled to mature in the near term are being reviewed closely for risk to repayment or renewal.

The Company has a diversified commercial real estate portfolio primarily located in suburban markets in its footprint.

As discussed in Item 7, the performance of the loan portfolio in 2023 generally improved and was well within the historic range at December 31, 2023.

At year-end 2023, commercial real estate loans which were modified and experiencing financial difficulty were 0.33% of total commercial real estate loans.

Loans rated substandard were 1.94% of commercial real estate loans, compared to 1.67% at year-end 2022.

At year-end 2023, the largest components of the commercial real estate portfolio (over 5% of the portfolio and excluding construction) were retail trade (21%), multifamily (13%), office (11%), healthcare (9%), and hospitality (8%).

The largest category, retail trade, was primarily comprised of properties anchored by strong grocery and big box tenants in suburban areas – with no significant tenant concentrations, and negligible indoor mall exposure.

The $493 million office portfolio was approximately 66% composed of Class A properties and approximately 68% of the office portfolio was maturing after 2025.

Boston properties were 13% of the office portfolio, with no high-rise office buildings.

There were no charge-offs of office loans in 2023, and nonaccrual office loans were 0.7% of total office loans at December 31, 2023.

Construction loans consisted primarily of multifamily (approximately 39%) and healthcare approximately (17%).

The Bank offers interest rate swaps to certain larger commercial mortgage borrowers.

These swaps allow the Bank to originate a mortgage based on a floating rate of interest and allow the borrower to swap into a fixed rate.

The Bank then concurrently enters into offsetting positions with third-party financial institutions.

The Bank may record fee income associated with offering the interest rate swaps to its borrowers.

The Bank originates construction loans to developers and commercial borrowers in its footprint.

The maximum loan to value limits for construction loans follow Federal Deposit Insurance Corporation ("FDIC") supervisory limits, up to a maximum of 85 percent.

The Bank commits to provide the permanent mortgage financing on most of its

construction loans on income-producing property.

The Bank commits to provide the permanent mortgage financing on many of its construction loans on income-producing property.

Advances on construction loans are made in accordance with a schedule reflecting the cost of the improvements.

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Commercial and industrial loans are commonly structured as variable rate loans, and are accordingly impacted by the recent environment of rising interest rates.

The Asset Based Lending Group serves the commercial middle market in New England, as well as the Bank’s market in northeastern New York and in the Mid-Atlantic.

The Asset Based Lending Group serves the commercial middle market in New England, as well as the Bank’s market in northeastern New York.

The group expands the Bank’s business lending offerings to include revolving lines of credit and term loans secured by accounts receivable, inventory, and other assets to manufacturers, distributors and select service companies experiencing seasonal working capital needs, rapid sales growth, a turnaround, buyout or recapitalization with credit needs generally ranging from $2 million to $25 million.

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This team is the Bank’s largest source of commercial lending fee revenue.

44 Business Capital is one of the top 20 bank originators of SBA 7A loans in the U.S.

Residential Mortgages.

Through its mortgage banking operations, the Bank offers fixed-rate and adjustable-rate residential mortgage loans to individuals with maturities of up to 30 years that are fully amortizing with monthly loan payments.

The majority of loans have been originated for investment, although the Bank targets more held for sale originations in the future.

The majority of mortgages originated in 2022 were jumbo mortgages exceeding the maximum amounts according to U.S.

government sponsored enterprise guidelines and were viewed as generally consistent with secondary market guidelines for these loans.

The majority of loans have been originated for investment.

The Bank does not offer subprime mortgage lending programs.

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Consumer Loans.

The Bank’s consumer loans are centrally underwritten and processed by its experienced consumer lending team.

The Bank engages in prime home equity lending, following its conforming mortgage underwriting guidelines with more streamlined verifications and documentation.

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The Company exited its prime indirect auto originations business in 2019 and has a remaining portfolio in runoff.

In late 2021, the Company expanded its consumer lending in its markets through a third party relationship with financial technology company Upstart which originates unsecured consumer loans through the internet using artificial intelligence technology in combination with the Bank’s underwriting criteria.

The Company previously originated consumer loans through a third party relationship with financial technology company Upstart which originates unsecured consumer loans through the internet using artificial intelligence technology in combination with the Bank’s underwriting criteria.

The Bank suspended originating loans through this partnership in mid-2022 and the remaining portfolio totaled $7 million at December 31, 2024.

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The Bank tracks loan underwriting exceptions and exception reports are actively monitored by executive lending management.

In 2023, the Company's administrative monitoring of the commercial real estate portfolio, the largest segment of the loan portfolio, reflects its risk based focus.

It reviewed the larger exposures of all commercial real estate loans maturing in the next five years, including reviewing debt service coverage.

The Company's administrative monitoring of the commercial real estate portfolio, the largest segment of the loan portfolio, reflects its risk based focus.

The Company periodically reviews the larger exposures of all commercial real estate loans maturing in the next five years, including reviewing debt service coverage.

It has expanded its monitoring of portfolio-level lease expirations and continued its review of trends in commercial real estate appraisals.

The monitoring of lease expirations was increased and the review of trends in commercial real estate appraisals was expanded.

The Company is reviewing trends in large loan originations and increasing its monitoring of portfolio components and trends, with a focus on office loans and multifamily.

The Company is reviewing trends in large loan originations and has increased its monitoring of portfolio components and trends, with a focus on office loans and multifamily.

Trends in lease maturities and renewals are updated periodically.

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In most cases, these limits are below 100% of risk based capital for all outstanding loans in each monitored category.

Based on the supervisory definition of commercial real estate loans which excludes owner-occupied properties, the supervisory measure of commercial real estate loans to total bank regulatory capital measured 292% at period-end, compared to 286% at year-end 2023.

The supervisory measure of construction loans to bank regulatory capital measured 54% and 51% at the above respective dates.

Problem Assets.

The Bank prefers to work with borrowers to resolve problems rather than proceeding to foreclosure.

For commercial loans, this may result in a period of forbearance or restructuring of the loan, which is normally done at current market terms and does not result in a “troubled” loan designation.

The Company monitors modifications of loans to borrowers in financial distress and tracks the subsequent performance of these loans.

For residential mortgage loans, the Bank generally follows FDIC guidelines to attempt a restructuring that will enable owner-occupants to remain in their home.

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Special mention are assets that do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories, but possess weaknesses.

Please see the additional discussion of nonaccruing and potential problem loans in Item 7 and additional information in notes to the financial statements.

Please see the additional discussion of non-accruing and potential problem loans in Item 7 and additional information in notes to the financial statements.

Allowance for Credit Losses on Loans.

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The Company periodically invests in corporate bonds, investment grade and non-rated fixed-income capital instruments issued by local and regional financial institutions, and funds financing community reinvestment projects.

Investment securities were sold in the fourth quarter of 2023 and first quarter of 2024.

This allowed the Company to reposition its balance sheet to improve net interest income and to fund the branch sale.

The securities were carried at fair value on the Company’s balance sheet and the non-operating losses on sale therefore had no effect on shareholders’ equity.

Due to elevated market interest rates, the net fair value of the investment securities portfolio was below amortized costs at year-end 2024.

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The Company also is monitoring the development of payment services which are growing in their importance in the personal and commercial deposit markets.

In 2024, the Bank introduced the Berkshire One offering, an innovative suite of digital-first banking solutions developed by strategically integrating advanced technology to enhance customer satisfaction and operational efficiency.

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

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The Bank is integrating with its growing private banking and MyBanker teams to further develop wealth management account generation.

The Wealth Management Group reported $1.4 billion in total assets under management at year-end 2023.

The Wealth Management Group reported $1.6 billion in total assets under management and $2.0 billion in assets under supervision at year-end 2024.

The comparable totals at year-end 2023 were $1.5 billion and $1.9 billion, respectively.

HUMAN CAPITAL MANAGEMENT

Berkshire’s people are the driving force behind its progress on its strategic goals, ability to deliver tailored financial solutions for its clients and vision to be a high-performing, relationship-focused, community-driven bank.

Berkshire’s people are the driving force behind its progress on its strategic goals and ability to deliver tailored financial solutions for its clients.

The Company’s approach to human capital management is grounded in its corporate values, business strategy and focuses on:

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• Compensation & Benefits

• Training, Development, Engagement & Retention

• Professional Development, Engagement & Retention

• Health & Wellness

The Board of Directors has ultimate responsibility for the strategy of the Company.

The Compensation Committee of the Board of Directors oversees executive compensation matters and the Corporate Responsibility & Culture committee oversees company culture as well as diversity, equity and inclusion.

The full Board also receives an annual briefing on employee engagement.

In 2024, the company realigned its workforce to ensure its organizational structure supported its operating needs and strategic objectives while it continued to build on successful strategies to recruit, develop, engage and retain top talent.

At year-end 2024, the Company had 1,216 full time equivalent staff, including 1,193 full-time positions and 45 part-time positions.

The Compensation Committee of the Board of Directors oversees executive compensation, and the Corporate Responsibility & Culture committee oversees company culture and related human capital matters.

The SEVP, Chief Human Resources & Culture Officer provides management oversight on human capital matters.

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Berkshire also maintains a small internal team of talent recruitment professionals.

Berkshire maintains a hybrid work model to expand its access to top talent and provide its employees with workplace flexibility.

These strategies have proved effective in meeting the demand for talent demonstrated by the Company’s strong track record of attracting high-caliber talent across retail, commercial, private banking, wealth management, business banking, technology and operational areas.

In addition, as market disruptions from mergers remain and macroeconomic pressures impact many companies, Berkshire will continue to leverage its differentiated brand and unique market positioning to hire community-focused bankers from its competitors and attract high-performing operational talent from outside the industry.

COMPENSATION & BENEFITS

A highly competitive labor market along with inflationary and macroeconomic pressures has impacted labor costs for all businesses.

Berkshire is not immune to these economic pressures.

The Company continually evaluates its compensation strategies and benefits programs, benchmarks to industry and peers and surveys the landscape of best practices to develop compensation and benefits packages that reward performance and retain top talent at all levels of the Company.

Against this backdrop, Berkshire raised the minimum starting pay to $17/hour and enhanced its vacation, wellness and bereavement benefits.

It also restructured its incentive plans across lines of business to provide opportunities for employees to earn higher compensation and bonuses for strong performance aligned with Berkshire’s financial and non-financial objectives.

Berkshire provides comprehensive medical coverage, paid vacation, personal and sick time, paid protective leave for gender-based violence, a 401(k) plan with employer match, long-term disability insurance, and group term life insurance.

In addition, Berkshire offers a day care reimbursement program, a dependent care expense account, family and medical leave along with flexible work arrangements, including the ability to work fully remote dependent on the duties of one’s job.

All benefits are available to married same-sex or different-sex couples as well as domestic partners.

In addition to its compensation and health benefits, Berkshire offers volunteer-time off, a matching-gift program, an employee assistance program, regular performance reviews, professional development and the You FIRST Fund to help employees impacted by personal financial hardships.

Nearly 100% (99.6%) of employees are eligible for benefits.

TRAINING, DEVELOPMENT, ENGAGEMENT & RETENTION

Training and development programs provide employees with the knowledge and skills needed to succeed and have upward career mobility.

Berkshire provides a robust incentive plan to reward performance, comprehensive medical coverage, paid vacation, personal and sick time, paid protective leave for gender-based violence, a 401(k) plan with employer match, long-term disability insurance, and group term life insurance.

In addition to its compensation and health benefits, Berkshire offers a rewards and recognition program, wellness day, volunteer-time off, a matching-gift program, an employee assistance program, regular performance reviews, professional development and the You FIRST Fund to help employees impacted by personal financial hardships.

PROFESSIONAL DEVELOPMENT, ENGAGEMENT & RETENTION

Training and development programs provide employees with the knowledge and skills to succeed and have upward career mobility.

They are critical components, along with competitive compensation and benefits programs, to having an engaged workforce.

Ultimately an engaged workforce drives high levels of productivity and retention which reduces human capital risks, expense, and advances Berkshire’s progress and performance.

The Company provides several learning and training programs consistent with one’s job responsibilities, professional goals, and development plans.

Ultimately an engaged workforce drives high levels of productivity and retention which reduces human capital risks, expense, and advances Berkshire’s performance.

The Company provides learning programs consistent with one’s job responsibilities, professional goals, and development plans.

Employees have regular performance assessments to identify strengths, areas for further growth and career interests.

Berkshire continues to reskill and upskill employees from across the Company helping them advance along career paths by taking on expanded responsibilities and roles.

The Company offers a mentoring program for high potential employees along with development programs as Berkshire remains committed to providing pathways for its associates to grow and maintains succession plans for key leadership positions.

Berkshire encourages its employees to participate in appropriate educational opportunities to expand their professional experience, aid them in their current position or support their self-development to benefit both the employee and Company.

As such, the Company offers educational assistance along with access to formal degree and certification programs, including college courses and Center for Financial Training (CFT) programs.

Berkshire continues to monitor the progress of its efforts to evaluate the effectiveness of programs and strategies on retention and engagement.

A comprehensive annual employee engagement survey is conducted to identify strengths and opportunity areas within the organization.

Overall, employees felt there was a strong spirit of teamwork, that Berkshire genuinely cares for its communities, and they have strong relationships with their direct managers.

Actions plans are developed for areas identified in the survey that do not meet the Company’s high expectations.

Beyond a formal engagement survey, Berkshire provides regular opportunities for managers and employees to ask questions, raise concerns and make suggestions for ways to build a better and stronger company.

This includes regular quarterly employee town halls and leadership forums, an employee suggestion program and regional gatherings that provide employees with direct access to Company leaders.

Berkshire continues to make progress reducing turnover, which decreased year-over-year.

This progress is the direct result of the actions it has taken to improve engagement and combat turnover including:

• Launched Company-wide reward and recognition program

• Enhanced vacation benefit

• Introduced wellness day

• Enhanced line of business incentive plans

• Established career paths for various job families

• Increased starting wage

• Offered mentoring program

• Developed robust employee communications program

• New employee events

Collectively these efforts have led to improved retention in each of the last three years, record high employee engagement and being named a Forbes America’s Best Midsize Employers.

HEALTH & WELLNESS

Berkshire works hard to keep its employees safe, healthy and support their physical, mental and financial wellbeing.

It provides its workforce comprehensive programs, benefits and a health and wellness employee resource group.

The Company also creates a workplace environment that is accessible and free from occupational hazards.

The Company, through its insurance provider, offers a fitness, weight and mind/body reimbursement along with a year-round calendar of various wellness related activities.

Since physical and mental health go hand-in-hand with financial health, Berkshire provides access to financial education resources, webinars along with its You FIRST Fund to assist employees experiencing financial hardships.

Additionally, Berkshire provides a comprehensive employee assistance program which includes counseling services and resources for those experiencing mental health challenges.

To further support the needs of its workforce, employees have access to a wellness day to disconnect, recharge and take care of themselves in whatever way works best for them.

The Health & Wellness Employee Resource Group provides yet another channel for employees to participate in regular programming and advocate for health and wellness options that suit their needs and interests.

WORKPLACE OF THE FUTURE

Berkshire continues to evolve and enhance its human capital management strategies to drive organizational growth in support of strategic priorities while combating risks, such as the labor market shortage, skills gap and rising labor and health costs.

The Company expects to maintain its hybrid workplace over the long-term, invest in technology to streamline processes and ensure the workforce structure is aligned with the Company’s forward operating needs.

While technology continues to play a bigger role in the future of Berkshire, helping to improve processes and drive efficiencies, people will always be at the core of its ability to deliver expert advisement and tailored solutions to its clients which in turn drives value for its shareholders and communities.

The Company remains confident that the Berkshire brand, value proposition and vision will continue to be a differentiator in the market.

Berkshire reskills and upskills employees from across the Company helping them advance along career paths by taking on expanded responsibilities and roles.

The Company offers a mentoring program for high potential employees and encourages employees to pursue appropriate educational opportunities.

Berkshire remains committed to providing pathways for its bankers to grow and maintains succession plans for key leadership positions.

Berkshire monitors the progress of its efforts to evaluate the effectiveness of programs and strategies through a comprehensive employee engagement survey and regular forums between employees and management.

The Company believes that its programs and strategies have been a differentiator in the market.

Further information on Berkshire Human Capital Management practices can be found in the Company’s most recent Sustainability Report.

SELECT HUMAN CAPITAL METRICS

† Human Capital* † Total number of FTEs

Number of Employees

Number of Full-Time Employees

Number of Part-Time Employees

Turnover Rate

Retention Rate

† Promotion Rate

† Minimum Starting Pay

† Average Tenure (years) 7 years

* All metrics reported are as of and for the year-ended December 31, 2023.

DIVERSITY, EQUITY & INCLUSION ("DEI")

Creating a diverse, accessible, inclusive and equitable workplace is an essential enabler to advancing the Company’s strategic goals, social and environmental commitments and vision.

Ultimately Berkshire’s goal is to attract and retain individuals from a wide range of backgrounds, cultures and experiences so that the workforce, executives and board composition reflect the diversity of the communities in which it operates.

It also seeks to ensure equity, accessibility, fairness and impartiality in all aspects of the Company’s workplace, banking practices and financial solutions while fostering an inclusive environment where all employees feel valued, respected and empowered.

The Company advances those goals through an integrated approach that includes:

• Strong oversight and governance practices

• Talent management and recruitment

• Education and training

• Workplace programming

• Multicultural community engagement

• Equitable product and service development

• Supplier diversity

The Company has a strong foundation of governance practices to ensure that diversity, equity and inclusion is embedded into Berkshire’s business activities.

This includes the Corporate Responsibility & Culture Committee of the Board of Directors which oversees DEI performance.

Berkshire’s Diversity, Equity & Inclusion Committee, which reports into the Board committee, provides additional management level oversight to the Company’s programming and performance.

The Senior Vice President, Chief Diversity Officer leads and executes the Company’s DEI programming.

Berkshire continues working to improve representation within its workplace through recruitment initiatives while enhancing its internal talent pipeline to ensure representation at all levels of the Company.

Berkshire identifies opportunities in targeted markets and business lines, develops deeper partnerships with non-profit organizations and affinity groups, advertises positions on specialized career sites, participates in affinity career events and uses internal as well as external recruitment professionals to ensure it receives candidate pools that reflect the rural and urban communities in which it operates.

It works to develop and implement strategies aimed at increasing representation at each level of the Company.

In addition, the Company regularly reviews the gender and ethnic diversity of its workforce at the employee, manager and executive management level and completes a review of pay and performance measures to ensure that all employees, regardless of gender and ethnicity, in comparable roles are compensated equitably.

As a result of Berkshire’s intentional and impactful efforts to date, Berkshire was listed in the Bloomberg Gender Equality Index and Human Rights Campaign’s Corporate Equality Index.

† Diversity, Equity & Inclusion*

† Percent of workforce comprised of women

† Percent of workforce comprised of ethnic minorities

† Percent of the Board comprised of women

† Percent of the Board comprised of ethnic minorities

† Percent of manager roles (officer+) comprised of women

† Percent of manager roles (officer+) comprised of ethnic minorities

† Percent of executive management roles comprised of women

† Percent of executive management roles comprised of ethnic minorities

*Workforce metrics reported are as of December 31, 2023.

Berkshire provides a full suite of diversity, equity & inclusion trainings.

The trainings help build understanding and provide employees with knowledge, skills and tactics they can put into practice.

All employees complete training annually through a combination of required and elective DEI-themed courses.

Berkshire intends to enhance its training program in 2024 to deepen alignment with corporate goals.

The training programs help form the basis for more inclusive recruitment, hiring, retention and customer service strategies going forward.

In addition, Berkshire offers six Employee Resource Groups ("ERGs"), each playing an integral role for employees and the culture of the company.

Every Employee Resource Group provides a safe space for dialogue, education, programming and

collective action on topics relevant to their members and the Company.

Through the ERGs, employees’ concerns and ideas to strengthen Berkshire’s culture are elevated to members of management and the Diversity, Equity & Inclusion Committee for action, empowering employees to collectively be engines of positive change within the workplace and the broader community.

The Company continues to work toward building economic equity in its communities by developing and offering safe, accessible, affordable financial solutions and programs including its MyFreedom Checking account, nationally certified by BankOn for its affordability, and the Futures Fund.

The Futures Fund is a special purpose credit program which provides access to a low-interest, low barrier to entry line of credit in collaboration with non-profit partners who provide wrap around technical assistance to minority, LGBTQIA+ and other businesses owned by underrepresented individuals.

Since launching the program in 2020, it has deployed nearly $1.7 million to underrepresented business owners.

Beyond offering financial solutions and wellness programming, Berkshire also understands that a diverse third-party base is important to achieving its operational goals, supply chain resilience, and vision.

As a result, Berkshire works to maintain a third-party base that reflects the communities in which it operates and, to the maximum extent possible, increase the utilization of third parties owned by underrepresented people.

Additional information on Berkshire’s Human Capital Management and Diversity, Equity & Inclusion practices can be found in the Company’s annual Corporate Responsibility & Sustainability Report, which details the company's environmental, social and governance programs.

*Workforce metrics reported are as of or for the year ended December 31, 2024

SUBSIDIARY ACTIVITIES

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The Bank is a Massachusetts-chartered trust company and its deposits are insured up to applicable limits by the FDIC.

The Bank is subject to extensive regulation by the Massachusetts Commissioner of Banks (the “Commissioner”), as its chartering agency, and by the FDIC, as its deposit insurer.

The Bank is subject to extensive regulation by the Massachusetts Commissioner of Banks (the “Commissioner”), as its chartering agency, and by the FDIC, as its primary regulator and deposit insurer.

The Bank is required to file reports with the Commissioner and the FDIC concerning its activities and financial condition in addition to obtaining regulatory approvals prior to entering into certain transactions such as mergers with, or acquisitions of, other depository institutions or branches of other institutions.

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At its interstate branches, the Bank may conduct any activity authorized under Massachusetts law that is permissible either for an institution chartered in that state (subject to applicable federal restrictions) or a branch in that state of an out-of-state national bank.

The New York State Superintendent of Banks, the Vermont Commissioner of Banking and Insurance, the Connecticut Commissioner of Banking and the Director of the Rhode Island Department of Business Regulation may exercise certain regulatory authority over the Bank’s branches in their respective states.

The New York State Superintendent of Financial Services, the Vermont Commissioner of the Department of Financial Regulation, the Connecticut Commissioner of Banking and the Director of the Rhode Island Department of Business Regulation may exercise certain regulatory authority over the Bank’s branches in their respective states.

Prompt Corrective Regulatory Action.

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An institution is deemed to be “well capitalized” if it has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, a common equity Tier 1 ratio of 6.5% or greater, and a leverage ratio of 5.0% or greater.

An institution is “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a common equity Tier 1 ratio of 4.5% or greater, and a leverage ratio of 4.0% or greater.

An institution is “undercapitalized” if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a common equity Tier 1 ratio of less than 4.5%, or a leverage ratio of less than 4.0%.

An institution is deemed to be “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a common equity Tier 1 ratio of 4.5% or greater, and a leverage ratio of 4.0% or greater.

An institution is deemed to be “undercapitalized” if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a common equity Tier 1 ratio of less than 4.5%, or a leverage ratio of less than 4.0%.

An institution is deemed to be “significantly undercapitalized” if it has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 4.0%, a common equity Tier 1 ratio of less than 3.0%, or a leverage ratio of less than 3.0%.

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“Undercapitalized” banks must adhere to growth, capital distribution (including dividend), and other limitations and are required to submit a capital restoration plan.

A bank’s compliance with such capital restoration plans must be guaranteed by its holding company in an amount equal to the lesser of 5% of the institution’s total assets when deemed “undercapitalized” or the amount needed to comply with regulatory capital requirements.

A bank’s compliance with such a capital restoration plan must be guaranteed by its holding company in an amount equal to the lesser of 5% of the institution’s total assets when deemed “undercapitalized” or the amount needed to comply with regulatory capital requirements.

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

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The Bank’s deposit accounts are insured by the Deposit Insurance Fund of the FDIC up to applicable limits.

The FDIC insures deposits up to the standard maximum deposit insurance amount (“SMDIA”) of $250,000.

The FDIC insures deposits up to the standard maximum deposit insurance amount (“SMDIA”) of $250,000 per depositor for each account ownership category.

The FDIC charges insured depository institutions premiums to maintain the Deposit Insurance Fund.

Under the risk-based assessment system, institutions deemed less risky of failure pay lower assessments.

The assessment range (inclusive of possible adjustments specified by the regulations) for institutions with greater than $10 billion of total assets was 1.5 to 40 basis points effective through December 31, 2022.

The FDIC has authority to increase insurance assessments and adopted a final rule in October 2022 to increase initial base deposit insurance assessment rates by two basis points beginning in the first quarterly assessment period of 2023.

As a result, effective January 1, 2023, assessment rates for institutions of the Bank’s size range from 2.5 to 42 basis points.

As a result, effective assessment rates for institutions of the Bank’s size range from 2.5 to 42 basis points.

Insurance of deposits may be terminated by the FDIC upon a finding that the institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, order or condition imposed by a regulator.

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Consolidated regulatory capital requirements identical to those applicable to the Bank apply also to the Company.

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

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

The Dodd-Frank Act codified the source of strength doctrine.

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Pursuant to regulatory policies, such circumstances include repurchasing common stock that would result in a net reduction as of the end of the quarter in the amount of such equity instruments outstanding compared with the beginning of the quarter.

In these circumstances, Federal Reserve nonobjection is required.

The Company obtained such nonobjection for its repurchase program in 2023 and for the repurchase program announced in January 2024.

circumstances, Federal Reserve nonobjection is required.

The Company obtained such nonobjection for its repurchase program in 2024.

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

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Under the Change in Bank Control Act, no person may acquire control of a bank holding company such as the Company unless the Federal Reserve Board has been given 60 days’ prior written notice and has not issued a notice disapproving the proposed acquisition, taking into consideration certain factors, including the financial and managerial resources of the acquirer and the competitive effects of the acquisition.

Control, as defined for this purpose, means ownership, control of or power to vote 25% or more of any class of voting stock.

Acquisition of more than 10% of any class of a bank holding company’s voting stock constitutes a rebuttable presumption of control under the regulations under certain circumstances including where, as is the case with the Company, the issuer has registered securities under Section 12 of the Securities Exchange Act of 1934.

Control, as defined for this purpose, means the power, directly or indirectly, to direct the management or policies of an insured depository institution, or the ownership, control of or power to vote 25% or more of any class of voting stock.

Acquisition of more than 10% of any class of a bank holding company’s voting stock constitutes a rebuttable presumption of control under the Change in Bank Control Act’s regulations under certain circumstances including where, as is the case with the Company, the issuer has registered securities under Section 12 of the Securities Exchange Act of 1934.

Massachusetts Holding Company Regulation.

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These include the Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers;

Home Mortgage Disclosure Act, requiring financial institutions to provide certain information about home mortgage and refinance loans;

the Home Mortgage Disclosure Act, requiring financial institutions to provide certain information about home mortgage and refinance loans;

the Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited bases in extending credit;

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the Retail Lending Test, the Retail Services and Products Test, the Community Development Financing Test, and the Community Development Services Test.

The applicability date for the majority of the provisions in the CRA regulations is January 1, 2026, and additional requirements will be applicable on January 1, 2027.

Under the CRA regulations, the applicability date for the majority of the provisions is January 1, 2026, and additional requirements will be applicable under the regulations on January 1, 2027.

On March 29, 2024, a federal court in the Northern District of Texas issued a preliminary injunction of the new CRA regulations, enjoining the federal banking agencies from enforcing the regulations against the plaintiff bank industry trade groups, and extending the regulations’ implementation dates day-for-day for each day the injunction is in place.

Cybersecurity and Protection of Customers’ Personal Information.

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The Fair Credit Reporting Act (FCRA) restricts information sharing among affiliates for marketing purposes.

Both the FCRA and Regulation V, which are issued by the Federal Reserve Board, govern the use and provision of information to consumer reporting agencies.

Both the FCRA and Regulation V, the implementing regulation administered by the Consumer Financial Protection Bureau, govern the use and provision of information to consumer reporting agencies.

In addition, federal banking regulators regularly issue guidance concerning cybersecurity standards to help enhance cyber risk management among financial institutions.

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The financial institution is also responsible for accounting for the disaster recovery and business continuity plans and processes of its critical third party service providers.

Failing to observe its obligations under regulatory guidance could subject the Company regulatory sanctions such as financial penalties.

Failing to observe its obligations under regulatory guidance could subject the Bank to regulatory sanctions such as financial penalties.

For a further discussion of risks related to cybersecurity, see Item 1A “Risk Factors.”

As a banking organization, the Company is required to notify its primary federal regulator as soon as possible but no later than 36 hours after the Company’s discovery of a computer-security incident that has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, the Company’s:

As a banking organization, the Bank is required to notify its primary federal regulator as soon as possible but no later than 36 hours after the Bank’s discovery of a computer-security incident that has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, the Bank’s:

(1) ability to carry out banking operations, activities, or processes, or deliver banking products and services to a material portion of its customer base, in the ordinary course of business;

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If an event requiring disclosure under the final rule were to occur, the Company’s disclosure would need to include the impact of the incident on the Company, as well as the material aspects of the nature, scope, and timing of the incident.

The final rule also requires registrants such as the Company to describe, on Form 10-K, their processes for assessing, identifying and managing material risks from cybersecurity threats and whether those risks have materially affected the registrant.

have materially affected the registrant.

The final rule also requires registrants such as the Company to describe Board oversight of risks emanating from cybersecurity threats and management’s role and expertise in assessing and managing material risks from cybersecurity threats.

See Item 1C “Cybersecurity” for more information.

Finally, the Company notes that there has been a recent uptick in activity among state regulators with respect to implementing privacy and cybersecurity standards and regulations.

Finally, the Company notes that there has been a recent uptick in activity among state legislatures and regulators with respect to implementing privacy and cybersecurity standards and regulations.

Some states have adopted laws and regulations requiring financial institutions to maintain cybersecurity programs and make details available regarding those programs.

Also, some states have either implemented, or modified, their data breach notification and/or data privacy rules.

While the Company cannot predict future legislative or regulatory actions of the various states, the Company expects continued activity in this area and will continue to monitor for developments in the states in which it operates.

Anti-Money Laundering Laws .

The Bank is subject to extensive anti-money laundering statutes and regulations, which require the institution to have in place an anti-money laundering compliance program and procedures and a customer identification program, among other things.

The Bank is subject to extensive anti-money laundering and countering the financing of terrorism (“AML/CFT”) statutes and regulations, which require the institution to have in place an AML/CFT compliance program and procedures and a customer identification program, among other things.

These laws and regulations also prohibit depository institutions from engaging in business with foreign shell banks;

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The federal income tax laws apply to the Company in the same manner as to other corporations with some exceptions.

The Company may exclude from income 100 percent of dividends received from the Bank and from Berkshire Insurance Group as members of the same affiliated group of corporations.

The Company reports income on a calendar year basis to the Commonwealth of Massachusetts.

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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 1. Business