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FORWARD-LOOKING STATEMENTS
This document contains “forward-looking statements” within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the SecuritiesExchange Act of 1934, as amended. You can identify these statements from the use of the words “may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,”“project,” “believe,” “intend,” “anticipate,” “expect,” “target” and similar expressions. There are many factors that could cause actual results to differ significantly fromexpectations described in the forward-looking statements. For a discussion of such factors, please see Berkshire’s most recent reports on Forms 10-K and 10-Q filedwith the Securities and Exchange Commission and available on the SEC’s website at www.sec.gov.
Further, given its ongoing and dynamic nature, it is difficult to predict what continued effects the novel coronavirus (COVID-19) pandemic will have on our business andresults of operations. The pandemic and the related local and national economic disruption may result in a continued decline in demand for our products and services;increased levels of loan delinquencies, problem assets and foreclosures; an increase in our allowance for credit losses; a decline in the value of loan collateral,including real estate; a greater decline in the yield on our interest-earning assets than the decline in the cost of our interest-bearing liabilities; and increasedcybersecurity risks, as employees increasingly work remotely. Accordingly, you should not place undue reliance on forward-looking statements, which reflect ourexpectations only as of the date of this document. Berkshire does not undertake any obligation to update forward-looking statements.
NON-GAAP FINANCIAL MEASURES
This presentation contains both financial measures based on accounting principles generally accepted in the United States (“GAAP”) and non-GAAP based financialmeasures, which are used where management believes them to be helpful in understanding the Company’s results of operations or financial position. Reconciliationsof these non-GAAP financial measures to the most comparable GAAP measures are included in the Appendix to this presentation. These disclosures should not beviewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that maybe presented by other companies.
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KEY MESSAGES
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New executive leadership team, talented hires and promotions in key roles; Creating renewed energy and focus across the organization
Becoming the leading “Socially Responsible Community Bank” in the communities we serve by embracing changing customer preferences
Sharper focus and sense of urgency to enhance stakeholder value; effective capital allocation in support of strategic choices to improve return on capital
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BERKSHIRE HILLS BANCORP (NYSE: BHLB) AT-A-GLANCE
Serving key needs of consumer, small business & commercial clients in New England / New York.
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Key Statistics
Headquarters Boston, MA
Founded 1846
Market CapitalizationAs of 5/8/21
$1.27B
Total BranchesExcluding branches to be consolidated or sold
106
Total AssetsAs of 3/31/21
$12.8B
Total DepositsAs of 3/31/21
$10.2B
Loan-to-depositsAs of 3/31/21
75%
Capital (CET1)As of 3/31/21
14%
Customer RelationshipsAs of 5/8/21
350,000+
23%
47%
22%
8% C&I
CRE
Residential
Consumer
Loans
New England / New York FootprintDiversified Balance Sheet (EOP 3/31/21)
27%
18%
10%
24%
21%
Non Int. Bearing DDA
NOW & Other
Savings
Money Market
CDs
Deposits *Mid-Atlantic branches held for sale
• Top 25 SBA 7(a) Lender in the Nation
• ~$1B in PPP Loans to 7,000+ small businesses1
• $773M Small Business loan balances; helping ~10k businesses2
• $21M Foundation Giving over the last 10 years
• 383k+ hours of employee volunteer service since 2009
• 1k+ company-sponsored volunteer events in the last 5 years
• 86k+ people benefited from financial literacy programs
• Inclusive mainstream banking3
• 70% higher reinvestment in our neighborhoods than industry banking4
• $38M in renewable energy loans
• Transitioning electricity supply towards 100% renewable
• Strong policies govern lending activities to protect the environment
BERKSHIRE HILLS BANCORP – A LEADER IN SOCIAL RESPONSIBILITY
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Local
Business
Community
Contribution
Financial
Inclusion
Environmental
1 Originated and referred loans 2 Balances as of 12.31.203 With products such as MyCheck, MyFreedom Checking, and Teen Checking4 Mighty Deposits: $76 of every $100 is reinvested back in local communities
TRANSFORMING AND ADAPTING TO CHANGES IN BANKING SECTOR
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Macro-economic Factors Preferences/Expectations Technology/Digitization Competition/Disruption
Low rates in the
short-to-medium term
Improving credit outlook
after a period of heightened
volatility
Higher standards for digital
experience across customer
journeys
Expectations for new ways
of working, such as work
from home
FinTech/PaaS Tech
acceleration, requiring
core systems platform
modernization & API
enablement
Need to reduce costs
increasing drive for
efficiency and scale;
accelerated M&A
Increasing competition from
Neo-Banks and FinTechs
Focused on Improving Drivers of Past Financial Underperformance
BHLB: WHY DO WE NEED TO TRANSFORM?
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Improve Revenue Mix
Grow fees/revenue ratio
through growth in SBA,
Mortgage Banking, Treasury &
Wealth Management revenues
2020 Baseline Performance Gap vs. Peers
1 Adjusted basis – excludes non-operating gains/losses, and expenses, including $554 million pre-tax Goodwill write-off as well as discontinued operations. See reconciliation at the end of this presentation. 2 Peers: ABCB, AUB, BXS, CBU, CUBI, FFBC, FRME, FMBI, GWB, HTLF, HOMB, INDB, NBTB, ONB, RNST, SFNC, SSB, TOWN, TRMK, UBSI, UCBI, and WSBC
Source: S&P Global Market Intelligence (“SPGMI”); FactSet
Improve & Grow
Balances
Optimize Deposit and Loan
mix while growing overall
balances
Improve Margins
Higher DDA penetration,
loan pricing
improvements
& wholesale funding
Improve Asset Mix
Better C&I and Small Business
concentration in Commercial;
prudent allocation to Consumer
Lending Growth
Improve NPS &
Relationship Depth
Track/improve Net Promoter
Score; drive up account
primacy, products and
services per relationship
Strengthen & Promote
ESG Performance
Leverage the purpose-driven,
community-dedicated
programs to promote and
strengthen ESG performance
0.24% 3.2% 69.0%
1.0% 8.0% 56.0%
ROA ROTCEEfficiency
Ratio
14%
12%
CET1
BHLB¹
Peer Median2
INTRODUCING OUR “BEST” PLAN
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Berkshire’s Exciting Strategic Transformation (BEST)
B E S T PILLARS
OPTIMIZE DIGITIZE ENHANCE
Optimize Products/Pricing and
Balances Mix for improved ROE
Digitize Account
Opening & Customer
Journeys
Digitize Marketing and
Customer Insights/Service
Enable API integrations with
FinTech/Sales Partners
Optimize
Physical footprint
Optimize
Processes &
Procurement
Grow profitable
originations and
balances
Enhance banker and
customer engagement
Enhance Capital allocation &
deployment for improved ROE
STRATEGIC CHOICE DOING MORE DOING LESS
PARTICIPATION
+ Accelerate growth in Business Banking, SBA Lending, Asset Based Lending,
Wealth Mgmt and MyBanker program
+ Increase Consumer Balances/ROE, while retaining ~65% Commercial mix
- Physical footprint (e.g. Branches, Hub Sites)
- High Risk, Non-relationship Lending
POSITIONING
+ “Socially Responsible Community Bank”
+ “Digi-Touch” Relationship Banking; driving up DDA penetration and account
primacy
- Physical footprint (e.g. Reevx brick & mortar)
- Decentralized sponsorships
ORGANIZATION
+ Improved alignment of incentive compensation with structured performance
management to drive shareholder value
+ Centralize Services that create efficiency (e.g., Procurement)
- Decentralized operations
- Limited spans of control
RISK+ Strengthen risk governance and higher focus on risk-adjusted-return on capital
+ Consumer Lending & FinTech Partnerships
- Pricing below RaRoC (Risk adjusted return)
- Manual underwriting for small $ originations
TECHNOLOGY+ Enhanced customer and banker experience
+ Streamlined operating and data platforms through cloud migration
- Number of applications to ‘run-the-bank’
(to invest in ‘change-the-bank’ initiatives)
- De-centralized Data Mgmt, Infosec
BEST – KEY STRATEGIC CHOICES TO POSITION BHLB FOR SUCCESS
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BEST – OPTIMIZE INITIATIVES AND IMPACT
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FOOTPRINT
Exit under-penetrated
markets
Branch consolidations
Hub site consolidations
Optimize Total Projected ROTCE Impact: ~300bps
PROCESSES
Centralized procurement
Enterprise process
mapping and
re-engineering
Automation and
outsourcing
BALANCE SHEET
Better Before Bigger –
improve asset/deposits mix
Reduce, eliminate
non-core/low-margin/
duplicative products
Optimize pricing
– deposit/treasury
repricing, loan relationship
RaROC pricing
HUMAN CAPITAL
Org structure and span of
control optimization
Redeployment of talent for
optimized outcomes
Optimize T&E expenses
BEST – DIGITIZE INITIATIVES AND IMPACT
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CHANNELS
Omni-channel experience:
MyBanker, Virtual Branch
(ITM)
Digitized branches and
CRM platforms
Digital account opening –
Consumer, Small Business
Digitize Total Projected ROTCE Impact: ~75bps
CUSTOMER
EXPERIENCE
Mobile-first, responsive
design across digital
experience
Mobile/digital app rating
& customer experience
enhancement
Increase digital capabilities
to enhance self-service
options
MARKETING/
CUSTOMER OUTREACH
Leverage and enhance
CRM functionality/
integration
Data warehouse and
analytics for improving
marketing ROI
Customer alerts and
insights for relationship
deepening
PARTNERSHIPS
API-enabled integrations
with FinTech and other
partners
New customer
originations for consumer
and business banking
Consolidate digital
interfaces for single-view,
single sign-on
BEST – ENHANCE INITIATIVES AND IMPACT
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GROW VERTICALS
Small Business & SBA
Lending
C&I / Asset-Based Lending
Consumer Loans
Wealth Management
Enhance Total Projected ROTCE Impact: ~350bps
ACCELERATE
ORIGINATIONS
Hire frontline teams
MyBanker program
Updated incentive plans
Productivity Management
CAPITAL ALLOCATION/
DEPLOYMENT
Capital allocation toward
high ROE businesses
Capital stack refinement
to lower cost of capital
Capital deployment to
enhance shareholder value
VALUE PROPOSITION
Employee engagement
and productivity
Relationship pricing
for customers
Purpose-driven positioning
for communities
BEST – KEY SUCCESS METRICS OVER 3 YEARS
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Through effective execution of BEST program over the next 3 years, we project to deliver…
*PPNR is a Non-GAAP number representing GAAP revenues minus GAAP expenses excluding credit provision expense and tax expense
**Reflects improvement over FY2020 non-GAAP financials
***ESG Index ratings: MSCI, ISS-ESG, Sustainalytics, Bloomberg
ROA
Increase ROA
by 76-81bps**
PPNR*
Increase PPNR
by $71-91M**
ROTCE
Increase ROTCE
by 680-880bps*
ESG
Be recognized as a top
quartile bank by
leading ESG indexes
in the US***
NPS
Become a top quartile
NPS (Net Promoter
Score) bank in
New England
100-105 bps10-12% Top 25%Top 25%$180-200M
BEST – YEAR 3 ROTCE IMPACT
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Optimize Digitize Enhance
Projected ROTCE
10–12%~100bps
3.2%
~300bps~75bps
~350bps
~100bps
11–13%
2020A ROATCE Optimize Digitize Enhance Credit Normalization& Return Capital
Year3 ROATCE Upside from higherrates
Normalized Credit and Capital Return
2020
Adj. ROTCE¹Optimize Digitize Enhance
Normalized
Credit and
Capital Return
Year 3
ROTCE
Upside with
higher rates
Year 3
ROTCE
with higher rates
1 BEST program scheduled to start in July 2021
BEST – A TRANSFORMATION TO IMPROVE FINANCIAL RESULTS
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Key Indicators 2020 BEST Year 3 Targets
Loan Balances CAGR (15.0%) 5-7%+
Loans/Deposits 79% ~90%
Adj. Efficiency Ratio 69% ~60%
CET1 14% ~11%
Adj. ROTCE 3.2% 10-12%2
Adj. ROA 0.24% 1.0%+
1 Data based on average balances2 Without upside with higher rates. Including upside with higher rates adj. ROTCE is projected to be 11-13%
Financial Impact of BEST
Earning Assets Mix
47%
15%
5%
33%
55% 15%
10%
20%
Funding Mix
28%
50%
22%Commercial
Residential
Consumer
Investments + HFS
2021 Q1 BEST Year 3 Target 2021 Q1 BEST Year 3 Target
Balance Sheet Optimization¹
Non-interest bearing
Other core deposits
Time, brokered and
borrowings
23%
52%
25%
BEST – EXECUTION PLAN AND GOVERNANCE
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DIGITIZE ENHANCEOPTIMIZEBEST Pillars
16 workstreams to support BEST Pillars to drive initiatives to track and achieve financial goalsWorkstreams
Governance
and Support
Structure
BEST Leadership
Decision and Execution Model
Forums, Meetings and Interaction Model
Transformation Office Workstreams
Transformation
Enablers
Communications
Change Management & Performance Management
BEST Impact
ROA PPNRROTCE ESG NPS
100-105
bps10-12%
Top
25%Top
25%
$180-
200M
EXPERIENCED EXECUTIVE LEADERSHIP TEAM
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Broad and Deep Sector Experience…
Nitin
Mhatre
Chief Executive
Officer
Sean
Gray
Chief Operating
Officer
Subhadeep
Basu
Chief Financial
Officer
Tami
Gunsch
SEVP,
Consumer
Banking
Gregory
Lindenmuth
SEVP,
Chief Risk
Officer
George
Bacigalupo
SEVP,
Commercial
Banking
Deborah
Stephenson
SEVP,
Compliance &
Regulatory
Jason
White
EVP,
Chief
Information
Officer
Jacqueline
Courtwright
EVP,
Chief HR and
Culture Officer
Gordon
Prescott
EVP,
General
Counsel & Corp.
Secretary
Georgia
Melas
EVP,
Chief Credit
Officer
Jennifer
Carmichael
EVP,
Chief Internal
Audit Officer
Years of Combined Banking
Experience (avg. 27 years) 325+
…driven by purpose and passion to
empower everyone’s financial potential
Executive Volunteerism on Nonprofit Boards
BHLB – GETTING BETTER, STRONGER, FASTER
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Becoming
the leading
socially-responsible,
omni-channel
community bank in
the communities
we serve
Adapting
to changing customer
preferences by
optimizing footprint
while enhancing &
digitizing customer
experience
Transforming
the company with a
new leadership team
and collective
organizational
resolve to deliver
high performance
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Maximizing
stakeholder/
shareholder value
while maintaining
strong capital base &
balance sheet for
future growth
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WE ARE COMMITTED TO
MAKING BERKSHIRE
BETTER, STRONGER…AND
FASTER
WE ARE COMMITTED TO
MAKING BERKSHIRE
BETTER, STRONGER…
FASTER