SELECTED FINANCIAL DATA
The following summary data is based in part on the consolidated financial
statements and accompanying notes and other information appearing elsewhere in
this or prior Forms 10-Q. Stock price information is for Berkshire's common
shares traded on the New York Stock exchange under the symbol "BHLB".
                                                                     At or for the                                 At or for the
                                                            Three Months Ended September 30,              Nine Months Ended September 30,
                                                                2021                   2020                  2021                   2020
NOMINAL AND PER SHARE DATA
Net earnings/(loss) per common share, diluted            $          1.31           $    0.42          $          1.97           $   (10.90)
Adjusted earnings/(loss) per common share, diluted                  0.53                0.53                     1.28                 0.32

(1) (2)

Net income/(loss), (thousands)                                    63,749              21,225                   98,416             (548,026)
Adjusted net income/(loss), (thousands) (1)(2)                    25,695              26,424                   63,814               16,315
Total common shares outstanding, (thousands)                      48,657              50,306                   48,657               50,306
Average diluted shares, (thousands)                               48,744              50,329                   49,963               50,290
Total book value per common share                                  24.21               23.03                    24.21                23.03
Tangible book value per common share (2)                           23.58               22.22                    23.58                22.22
Dividends per common share                                          0.12                0.12                     0.36                 0.60
Full-time equivalent staff, continuing operations                  1,333               1,507                    1,333                1,507

PERFORMANCE RATIOS (3)
Return on equity                                                   22.18   %            7.50  %                 11.30   %           (48.26) %
Adjusted return on equity (1)(2)                                    8.94                9.33                     7.33                 1.44
Return on tangible common equity (1)(2)                            23.14                8.32                    11.97               (67.09)
Adjusted return on tangible common equity (1)(2)                    9.53               10.27                     7.88                 2.39
Return on assets                                                    2.14                0.67                     1.07                (5.63)
Adjusted return on assets (1)(2)                                    0.86                0.84                     0.69                 0.17
Net interest margin, fully taxable equivalent (FTE)                 2.56                2.61                     2.60                 2.75
(4)(6)
Efficiency ratio (1)(2)                                            68.76               65.39                    69.32                67.72

FINANCIAL DATA (in millions, end of period)
Total assets                                             $        11,846           $  12,614          $        11,846           $   12,614
Total earning assets                                              11,145              11,832                   11,145               11,832
Total loans                                                        6,836               8,982                    6,836                8,982

Total deposits                                                    10,365              10,467                   10,365               10,467
Loans/deposits (%)                                                    66   %              86  %                    66   %               86  %

ASSET QUALITY (5)
Allowance for credit losses, (millions)                  $           113           $     134          $           113           $      134
Net charge-offs, (millions)                                           (2)                 (6)                     (17)                 (21)
Net charge-offs (QTD annualized)/average loans                      0.12   %            0.27  %                  0.30   %             0.29  %
Provision (benefit)/expense, (millions)                  $            (4)          $       1          $             3           $       66
Non-performing assets, (millions)                                     39                  49                       39                   49
Non-performing loans/total loans                                    0.54   %            0.53  %                  0.54   %             0.53  %
Allowance for credit losses/non-performing loans                     304                 284                      304                  284
Allowance for credit losses/total loans                             1.65                1.50                     1.65                 1.50

CAPITAL RATIOS
Common equity tier 1 capital to risk-weighted assets                15.3   %            13.2  %                  15.3   %             13.2  %
Tier 1 capital leverage ratio                                        9.9                 9.2                      9.9                  9.2
Tangible common shareholders' equity/tangible assets (2)             9.7                 8.9                      9.7                  8.9


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                                                     At or for the                          At or for the
                                            Three Months Ended September 30,       Nine Months Ended September 30,
                                                2021                2020               2021                2020
FOR THE PERIOD: (In thousands)
Net interest income from continuing         $   71,368          $  77,055          $  221,854          $ 241,073
operations
Non-interest income from continuing             73,635             19,963             121,839             42,980

operations

Net revenue from continuing operations         145,003             97,018             343,693            284,053
Provision for credit losses                     (4,000)             1,200               2,500             65,878
Non-interest expense from continuing            69,460             72,843             216,486            768,443
operations
Net income/(loss)                               63,749             21,225              98,416           (548,026)
Adjusted income (1)(2)                          25,695             26,424              63,814             16,315

______________________________________________________________________________________________

(1) Adjusted measurements are non-GAAP financial measures that are adjusted to
exclude net non-operating charges primarily related to acquisitions and
restructuring activities. Refer to the Reconciliation of non-GAAP Financial
Measures for additional information.
(2)   Non-GAAP financial measure. Refer to the Reconciliation of non-GAAP
Financial Measures for additional information.
(3) All performance ratios are annualized and are based on average balance sheet
amounts, where applicable.
(4) Fully taxable equivalent considers the impact of tax advantaged investment
securities and loans.
(5)  The effect of purchase accounting accretion for loans, time deposits, and
borrowings on the net interest margin was an increase in all periods presented.
The increase for the three months ended September 30, 2021 and 2020 was 0.06%
and 0.08%, respectively. The increase for the nine months ended September 30,
2021 and 2020 was 0.06% and 0.07%, respectively.
                                                                            

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AVERAGE BALANCES AND AVERAGE YIELDS/RATES
The following table presents average balances and an analysis of average rates
and yields on an annualized fully taxable equivalent basis for the periods
included:
                                                                 Three Months Ended September 30,                                         Nine Months Ended September 30,
                                                              2021                              2020                                   2021                              2020
(Dollars in millions)                             Average         Yield/Rate        Average        Yield/Rate              Average         Yield/Rate        Average        Yield/Rate
                                                  Balance        (FTE basis)        Balance       (FTE basis)              Balance        (FTE basis)        Balance       (FTE basis)
Assets
Loans:
Commercial real estate                          $   3,577                 3.40  % $  3,986                 3.52  %       $   3,611                 3.38  % $  3,997                 3.90  %
Commercial and industrial loans                     1,370                 4.78       2,192                 3.88              1,612                 4.71       2,047                 4.31
Residential mortgages                               1,499                 3.65       2,224                 3.78              1,613                 3.72       2,444                 3.78
Consumer loans                                        545                 3.95         801                 3.59                587                 3.85         863                 3.86
Total loans (1)                                     6,991                 3.77       9,203                 3.68              7,423                 3.78       9,351                 3.95
Investment securities (2)                           2,312                 2.09       1,874                 2.78              2,255                 2.21       1,804                 3.06
Short-term investments & loans held for sale        1,762                 0.17         766                 0.21              1,623                 0.13         613                 0.83

(3)

Mid-Atlantic region loans held for sale(4)            155                 3.82           -                    -                239                 3.96           -                    -
Total interest-earning assets                      11,220                 2.86      11,843                 3.31             11,540                 2.96      11,768                 3.63
Intangible assets                                      31                       X       41                                      33                              410
Other non-interest earning assets                     674                              760                                     696                      

725

Assets from discontinued operations                     -                               16                                       -                               75
Total assets                                    $  11,925                         $ 12,660                               $  12,269                         $ 12,978

Liabilities and shareholders' equity
Deposits:
NOW and other                                   $   1,316                 0.05  % $  1,243                 0.24  %       $   1,343                 0.09  % $  1,196                 0.34  %
Money market                                        2,716                 0.16       2,674                 0.38              2,756                 0.20       2,699                 0.65
Savings                                             1,112                 0.04         941                 0.10              1,056                 0.06         896                 0.11
Time                                                1,893                 0.86       3,056                 1.63              2,056                 0.97       3,263                 1.78
Total interest-bearing deposits                     7,037                 0.31       7,914                 0.81              7,211                 0.38       8,054                 1.00
Borrowings and notes (5)                              253                 3.89         777                 2.36                377                 3.26         890                 2.44
Mid-Atlantic region interest-bearing                  306                 0.51           -                    -                447                 0.54           -                    -

deposits (4)

Total interest-bearing liabilities                  7,596                 0.43       8,691                 0.95              8,035                 0.52       8,944                 1.14
Non-interest-bearing demand deposits                2,901                            2,559                                   2,742                      

2,250

Other non-interest earning liabilities                279                              254                                     331                      

245

Liabilities from discontinued operations                -                               23                                       -                               25
Total liabilities                                  10,776                           11,527                                  11,108                           11,464

Total preferred shareholders' equity                    -                               20                                       -                      

20

Total common shareholders' equity                   1,149                            1,113                                   1,161                      

1494

Total shareholders' equity (2)                      1,149                            1,133                                   1,161                      

1,514

Total liabilities and stockholders' equity      $  11,925                         $ 12,660                               $  12,269                         $ 12,978


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                                               Three Months Ended September 30,                                         Nine Months Ended September 30,
                                             2021                            2020                                    2021                              2020
                                  Average       Yield/Rate        Average       Yield/Rate            Average Balance   Yield/Rate (FTE     Average     Yield/Rate (FTE
                                  Balance       (FTE basis)       Balance       (FTE basis)                                  basis)         Balance          basis)
Net interest spread                                     2.43  %                         2.36  %                                   2.44  %                         2.49  %
Net interest margin (6)                                 2.56                            2.61                                      2.60                            2.75
Cost of funds                                           0.31                            0.73                                      0.38                            0.92
Cost of deposits                                        0.22                            0.61                                      0.28                            0.79

Supplementary data
Total deposits (In millions)    $  9,938                        $ 10,473                              $       9,953                       $  10,304
Fully taxable equivalent income    1,586                           1,512                                      4,739                           4,917

adj. (In thousands) (7)

_______________________________________

(1)   The average balances of loans include nonaccrual loans and deferred fees
and costs.
(2)   The average balance for securities available for sale is based on
amortized cost. The average balance of equity also reflects this adjustment.
(3)   Interest income on loans held for sale is included in loan interest income
on the income statement.
(4)  The Mid-Atlantic region loans are not included in the loan yields; however
they are included in the total earning assets yield and the net interest margin.
The Mid-Atlantic region deposits are not included in the deposit costs; however,
they are included in the total interest-bearing liabilities cost and the net
interest margin.
(5)   The average balances of borrowings includes the capital lease obligation
presented under other liabilities on the consolidated balance sheet.
(6)   Purchase accounting accretion totaled $1.7 and $2.5 million for the three
months ended September 30, 2021 and 2020, respectively. Purchase accounting
accretion totaled $5.1 and $7.7 million for the nine months ended September 30,
2021 and 2020, respectively.
(7)  Fully taxable equivalent considers the impact of tax advantaged investment
securities and loans.
                                                                            

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NON-GAAP FINANCIAL MEASURES
This document contains certain non-GAAP financial measures in addition to
results presented in accordance with Generally Accepted Accounting Principles
("GAAP"). These non-GAAP measures are intended to provide the reader with
additional supplemental perspectives on operating results, performance trends,
and financial condition. Non-GAAP financial measures are not a substitute for
GAAP measures; they should be read and used in conjunction with the Company's
GAAP financial information. A reconciliation of non-GAAP financial measures to
GAAP measures is provided below. In all cases, it should be understood that
non-GAAP measures do not depict amounts that accrue directly to the benefit of
shareholders. An item which management excludes when computing non-GAAP adjusted
earnings can be of substantial importance to the Company's results for any
particular quarter or year. The Company's non-GAAP adjusted earnings information
set forth is not necessarily comparable to non- GAAP information which may be
presented by other companies. Each non-GAAP measure used by the Company in this
report as supplemental financial data should be considered in conjunction with
the Company's GAAP financial information.

The Company utilizes the non-GAAP measure of adjusted earnings in evaluating
operating trends, including components for operating revenue and expense. These
measures exclude amounts which the Company views as unrelated to its normalized
operations. These items primarily include securities gains/losses, merger costs,
restructuring costs, goodwill impairment, and discontinued operations.
Discontinued operations are the Company's national mortgage banking operations
for which the Company completed the final wind-down of the operations during the
fourth quarter of 2020. Merger costs consist primarily of severance/benefit
related expenses, contract termination costs, systems conversion costs, variable
compensation expenses, and professional fees. Restructuring costs generally
consist of costs and losses associated with the disposition of assets and
liabilities and lease terminations, including costs related to branch sales.
Restructuring costs also include severance and consulting expenses related to
the Company's strategic review. For 2021, the net gains on sale of business
operations and assets was related to the sale of the insurance subsidiary and
the Mid-Atlantic branch operations.

The Company also calculates adjusted earnings per share based on its measure of
adjusted earnings and diluted common shares. The Company views these amounts as
important to understanding its operating trends, particularly due to the impact
of accounting standards related to merger and acquisition activity. Analysts
also rely on these measures in estimating and evaluating the Company's
performance. Management believes that the computation of non-GAAP adjusted
earnings and adjusted earnings per share may facilitate the comparison of the
Company to other companies in the financial services industry. The Company also
adjusts certain equity related measures to exclude intangible assets due to the
importance of these measures to the investment community.
                                                                            

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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
The following table summarizes the reconciliation of non-GAAP items recorded for
the periods indicated:
                                                                   At or for the Three Months    At or for the Nine Months Ended
                                                                       Ended September 30,                September 30,
(In thousands)                                                         2021            2020            2021            2020
GAAP Net income/(loss)                                           $    

63,749 $ 21,225 $ 98,416 $ (548,026)
Adjustment: Net losses on securities (1)

                                        166            1,017            681             9,925

Adj: Net (gains) on sale of business                                 (51,885)               -        (51,885)                -
operations and assets
Adj: Goodwill impairment                                                   -                -              -           553,762

Adj: Restructuring and other expense                                   1,425            5,316          4,917             5,316

Adj: Loss/(income) from discontinued                                       -            2,477              -            21,741
operations before income taxes
Adj: Income taxes                                                     12,240           (3,611)        11,685           (26,403)
Total adjusted income/(loss) (non-GAAP) (2)                  (A) $    

25,695 $ 26,424 $ 63,814 $ 16,315

GAAP Total revenue                                               $   

145,003 $ 97,018 $ 343,693 $ 284,053
Adjustment: Losses on securities, net (1)

                                       166            1,017            681             9,925
Adj: Net (gains) on sale of business                                 (51,885)               -        (51,885)                -
operations and assets
Total operating revenue (non-GAAP) (2)                       (B) $    

93,284 $ 98,035 $ 292,489 $ 293,978

GAAP Total non-interest expense                                  $    

69,460 $ 72,843 $ 216,486 $ 768,443
Less: Total non-operating expenses (see above)

                         (1,425)          (5,316)        (4,917)           (5,316)
Less: Goodwill impairment                                                  -                -              -          (553,762)
Operating non-interest expense (non-GAAP) (2)                (C) $    

68,035 $ 67,527 $ 211,569 $ 209,365

(In millions, except per share data)
Total average assets                                         (D) $    

11.925 $ 12,660 $ 12,268 $ 13,001
Total average equity

                           (E)       1,150            1,133          1,161             1,513
Total average tangible shareholders' equity                  (F)       1,118            1,091          1,128             1,104

(2)

Total average tangible common shareholders'                  (G)       1,118            1,071          1,128             1,083
equity (2)
Total tangible shareholders' equity,                         (H)       1,147            1,138          1,147             1,138
period-end (2)(3)
Total tangible common shareholders' equity,                  (I)       1,147            1,118          1,147             1,118
period-end (2)(3)
Total tangible assets, period-end (2)(3)                     (J)      11,815           12,574         11,815            12,574
Total common shares outstanding, period-end                  (K)      48,657           50,306         48,657            50,306

(thousands)

Average diluted shares outstanding (thousands)               (L)      48,744           50,329         49,963            50,290

Earnings per common share, diluted                               $      

1.31 $ 0.42 $ 1.97 $ (10.90)
Adjusted earnings per common share, diluted

                (A/L)        0.53             0.53           1.28              0.32

(2)

Book value per common share, period-end                                24.21            23.03          24.21             23.03
Tangible book value per common share,                      (I/K)       23.58            22.22          23.58             22.22
period-end (2)
Total shareholders' equity/total assets                                 9.95             9.35           9.95              9.35
Total tangible shareholder's equity/total                  (H/J)        9.71             9.05           9.71              9.05
tangible assets (2)

Performance ratios (4)
GAAP return on equity                                                  22.18    %        7.50  %       11.30    %       (48.26) %
Adjusted return on equity (2)                              (A/E)        8.94             9.33           7.33              1.44
Return on tangible common equity (2)(5)                                23.14             8.32          11.97            (67.09)


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Adjusted return on tangible common                 (A+O)/(G)      9.53        10.27         7.88         2.39
equity (2)(5)
GAAP return on assets                                             2.14         0.67         1.07        (5.63)
Adjusted return on assets (2)                          (A/D)      0.86         0.84         0.69         0.17
Efficiency ratio (2)                           (C-O)/(B+M+P)     68.76        65.39        69.32        67.72
(in thousands)
Supplementary data (In thousands)
Tax benefit on tax-credit investments                    (M) $   2,195    $   1,377    $   2,315    $   3,364
(6)
Non-interest income charge on tax-credit                 (N)    (1,789)      (1,090)      (1,996)      (2,673)
investments (7)
Net income on tax-credit investments                   (M+N)       406      

287 319 691

Intangible amortization                                  (O)     1,296        1,530        3,912        4,668
Fully taxable equivalent income                          (P)     1,586        1,512        4,739        4,917
adjustment


_________________________________________________________________________________________

(1)   Net securities losses/(gains) for the periods ending September 30, 2021
and 2020 include the change in fair value of the Company's equity securities in
compliance with the Company's adoption of ASU 2016-01.
(2)  Non-GAAP financial measure.
(3)  Total tangible shareholders' equity is computed by taking total
shareholders' equity less the intangible assets at period-end. Total tangible
assets is computed by taking total assets less the intangible assets at
period-end.
(4)   Ratios are annualized and based on average balance sheet amounts, where
applicable.
(5)   Adjusted return on tangible common equity is computed by dividing the
total adjusted income adjusted for the tax-affected amortization of intangible
assets, assuming a 27% marginal rate, by tangible equity.
(6)   The tax benefit is the direct reduction to the income tax provision due to
tax credits and deductions generated from investments in historic rehabilitation
and low-income housing.
(7)   The non-interest income charge is the reduction to the tax-advantaged
commercial project investments, which are incurred as the tax credits are
generated.

                                                                            

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GENERAL
Management's discussion and analysis of financial condition and results of
operations is intended to assist in understanding the financial condition and
results of operations of the Company. The following discussion and analysis
should be read in conjunction with the Company's consolidated financial
statements and the notes thereto appearing in Part I, Item 1 of this document
and with the Company's consolidated financial statements and the notes thereto
and Management's Discussion and Analysis of Financial Condition and Results of
Operations included in the 2020 Annual Report on Form 10-K. In the following
discussion, income statement comparisons are against the same period of the
previous year and balance sheet comparisons are against the previous fiscal
year-end, unless otherwise noted. Operating results discussed herein are not
necessarily indicative of the results for the year 2021 or any future period. In
management's discussion and analysis of financial condition and results of
operations, certain reclassifications have been made to make prior periods
comparable. Tax-equivalent adjustments are the result of increasing income from
tax-advantaged loans and securities by an amount equal to the taxes that would
be paid if the income were fully taxable based on a 27% marginal rate (including
state income taxes net of federal benefit). In the discussion, unless otherwise
specified, references to earnings per share and "EPS" refer to diluted earnings
per common share.

Berkshire Hills Bancorp, Inc. ("Berkshire" or "the Company") is a Delaware
corporation headquartered in Boston and the holding company for Berkshire Bank
("the Bank") and Berkshire Insurance Group, Inc. Established in 1846, the Bank
operates as a commercial bank under a Massachusetts trust company charter.

The Bank has a goal of transforming what it means to bank its neighbors
socially, humanly, and digitally to empower the financial potential of people,
families, and businesses in its communities as it pursues its vision of being
the leading socially responsible omni-channel community bank in the markets it
serves. Berkshire Bank provides business and consumer banking, mortgage, wealth
management, and investment services. Headquartered in Boston, Berkshire has
approximately $11.8 billion in assets and operates 106 branch offices in New
England and New York.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this document that are not historical facts may
constitute forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (referred to as the Securities Act), and
Section 21E of the Securities Exchange Act of 1934, as amended (referred to as
the Securities Exchange Act), and are intended to be covered by the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995, including
statements regarding our outlook for earnings, net interest margin, fees,
expenses, tax rates, capital and liquidity levels and other matters regarding or
affecting Berkshire and its future busines or operations. You can identify these
statements from the use of the words "may," "will," "should," "could," "would,"
"outlook," "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, 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 included in our Annual Report on Form
10-K for the fiscal year ended December 31, 2020 and the Risk Factors in Item 1A
of this report. Additionally, the COVID-19 pandemic may have further adverse
impacts on the Company, its customers, and the communities where it operates,
with possible adverse impacts on the Company's business, results of operations
and financial condition for an indefinite period of time. Because of these and
other uncertainties, Berkshire's actual results, performance or achievements, or
industry results, may be materially different from the results indicated by
these forward-looking statements. In addition, Berkshire's past results of
operations do not necessarily indicate Berkshire's combined future results. You
should not place undue reliance on any of the forward-looking statements, which
speak only as of the dates on which they were made. Berkshire is not undertaking
an obligation to update forward-looking statements, even though its situation
may change in the future, except as required under federal securities law.
Berkshire qualifies all of its forward-looking statements by these cautionary
statements.
                                                                            

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SUMMARY

Berkshire recorded net income of $64 million, or $1.31 per diluted share, in the
third quarter of 2021. This was an increase compared to $21 million, or $0.42
per share, in the third quarter of 2020. The increase was primarily due to $38
million in after-tax gains, or $0.78 per share, recorded on the sale at the end
of August 2021 of Berkshire's insurance and Mid-Atlantic branch operations.

The Company uses the non-GAAP measure of adjusted earnings to assess its
performance. This measure excludes items not viewed as related to ongoing
operations. Third quarter adjusted earnings per share was unchanged at $0.53 in
both 2021 and 2020. Lower adjusted revenue in 2021 was offset by a favorable
change in the provision for credit losses on loans. The above sale gains are
excluded from adjusted revenue and earnings. Other major exclusions are merger,
restructuring, and other expense.

Nine month results in 2020 were a $548 million loss due primarily to credit loss
provision and goodwill charges in the first half of the year stemming from the
onset of the COVID-19 global pandemic. Nine month results in 2021 were a $98
million profit, with both GAAP and adjusted quarterly earnings reaching the
highest level in the third quarter, including the benefit of improving credit
quality as pandemic economic recovery has strengthened.

Asset quality has improved during 2021, with credit losses and delinquencies
declining below pre-pandemic levels in the most recent quarter. Berkshire's
measures of capital and liquidity remained high and strengthened during 2021.
Berkshire's measures of interest rate sensitivity show significant potential
benefit from possible higher future market interest rates. The Company's ongoing
restructuring of liabilities has benefited its funding costs, with more
potential benefit from maturing liabilities over the next year. Berkshire
completed a 2.5 million, or 5%, share repurchase program in the second and third
quarters of 2021.

THIRD QUARTER FINANCIAL HIGHLIGHTS (Comparisons are with previous year, unless otherwise noted):

•$52 million pre-tax net gain on the sale of insurance and Mid-Atlantic branch
operations
•4% increase in total non-interest income excluding gains/(losses)
•66% decrease in net loan charge-offs to $2 million
•$4 million benefit to credit loss provision due to a release of credit loss
allowance
•Reduction in wholesale funding to 4% of assets, including prepayment of most
Federal Home Loan Bank borrowings
•Deposit costs down year-over-year to 0.22% from 0.61%

The most recent quarter was the first full quarter since Berkshire announced its
Berkshire's Exciting Strategic Transformation (BEST) plan. This comprehensive
transformation plan, designed to enhance value for all stakeholders, is viewed
as contributing to improved focus on Berkshire's long-term efficiency, its
customers, and its communities. Exiting its Mid-Atlantic and insurance
operations was a step in improving the Company's operations and produced $52
million in net sale gains which bolstered third-quarter income. The 2.5 million
share repurchase program was completed far ahead of the authorized time,
returning a total of nearly $69 million in excess capital to shareholders.

In the third quarter, Berkshire also announced its BEST Community Comeback
initiative that targets to lend and invest to strengthen the economic health of
its communities, an industry-leading commitment given the relative size of the
program and the Bank. The Company is positioned to support other BEST
initiatives in development including its recently announced consumer lending
partnership with the fintech Upstart. The Company also initiated certain
restructuring activities in the third quarter related to real estate
consolidation, borrowings prepayments, and operations outsourcing as part of its
optimization and efficiency strategies.

The Company continued to record strong deposit growth during the quarter and its
expanded banking teams are focused on building loan origination volumes. The
Company reduced its total branch banking offices from 130 offices at the start
of the year to 106 offices currently. This includes the sale of 8 Mid-Atlantic
offices and the consolidation of 16 offices in accordance with the plan
announced in the fourth quarter of 2020. Additionally, the Company is
considering the further consolidation of another 5-10 branches in the upcoming
year. Berkshire is
                                                                            

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executing this plan in conjunction with the expansion of its MyBanker concierge
style bankers in affected markets. Deposit retention in the consolidated
branches is regarded as high including the benefit of this strategy.

In the most recent quarter, Berkshire announced further refreshment of its board
of directors. Board Chair J. Williar Dunlaevy retired from the board, and Vice
Chair David Brunelle was elected to the position of Board Chair. The Board also
elected Jeffrey Kip as a new director. Mr. Kip, age 53, is Chief Executive
Officer of Angi International which provides internet tools and resources for
home improvement, maintenance, and repair projects. After quarter-end, Deborah
Bailey resigned from her position as director of the Company and the Bank.

Berkshire announced the recruitment of executive leaders during the quarter,
following the previously announced resignation of Tami Gunsch, Senior EVP and
Head of Consumer Banking. Ellen Steinfeld was hired as EVP, Head of Consumer
Lending & Payments. Lucia "Lucy" Bellomia was hired as EVP, Head of Retail
Banking. Berkshire hired veteran Connecticut banking professional Jeffrey Klaus
as SVP, Regional President & Middle Market Team Leader in Southern Connecticut,
based in New Haven. Additionally, the Company announced hirings of experienced
frontline bankers in its growing Wealth Management, SBA Lending, Commercial
Banking, Private Banking, and MyBanker units. The Company believes that merger
activities among major local competitors provide opportunity for customer and
talent acquisition over the near and medium term.

COMPARISON OF THE FINANCIAL POSITION AT SEPTEMBER 30, 2021 AND DECEMBER 31, 2020

Summary: Total assets decreased to $11.8 billion from $12.8 billion during the
first nine months of 2021. This included the $0.6 billion impact of the sale of
the Mid-Atlantic branch operations, along with the impact of the $0.5 billion
reduction in borrowings funded with proceeds from loan run-off, which also
contributed to higher short-term investment balances. As a result, the Company's
liquidity strengthened further, as well as the sensitivity of its income to
higher market interest rates which are anticipated by financial markets. The
ratio of loans to deposits decreased to 66% from 79%, and the regulatory ratio
of common equity tier 1 capital to risk-weighted assets increased to 15.3% from
13.8%. All major measures of asset quality strengthened as economic conditions
improved from distressed pandemic conditions.

Investments: Short-term investments increased by $505 million to $1.97 billion
in the first nine months of the year. These funds are available for ongoing
payoffs of maturing brokered deposits, and are available to fund targeted net
loan growth in 2022, as well as potential increases in the investment securities
portfolio. Most short-term investments are held at the Federal Reserve Bank of
Boston.

The portfolio of investment securities increased by $109 million, or 5%, to
$2.33 billion in the first nine months of the year. Growth was concentrated in
agency mortgage-related securities and municipal securities. Emphasis has been
placed on the held to maturity designation to limit impacts on equity if rates
rise and bond prices decline. Total held to maturity securities increased by
$187 million, or 40%, for the year-to-date. The portfolio is highly liquid, with
an average life of 4.4 years for the bond portfolio at period-end. The portfolio
yield decreased to 2.09% in the most recent quarter from 2.69% in the fourth
quarter of 2020, due to ongoing compression of asset yields. The portfolio of
investment securities had an unrealized gain of $24 million, or 1.0% of cost, at
period-end, compared to $68 million, or 3.2% of cost at the start of the year,
due to the rise in medium term interest rates during the first nine months of
2021. The Company continues to evaluate possible expansion of the securities
portfolio to utilize a portion of excess short-term investments, taking into
consideration the outlook for interest rates, loan growth, and deposit
behaviors.

Loans: Total loans decreased in the first nine months of 2021 by $1.25 billion,
or 15%, to $6.84 billion. This was primarily due to a $587 million decrease in
Paycheck Protection Program ("PPP") loans which were prepaid through the SBA
loan forgiveness program. The remaining balance of PPP loans was $46 million at
period-end. All other commercial loans decreased by $153 million, or 3%. This
was primarily due to a $134 million decrease in loans to COVID sensitive
industries. The Company also has targeted runoff of selected commercial
portfolios not contributing to its BEST strategic goals. Commercial line
utilization decreased from 51% to 47% as businesses continued to accumulate
liquidity resulting from federal support programs. Overall commercial loan
demand has been muted as the Company's markets recover from pandemic conditions.
Berkshire is recruiting bankers to expand its loan originations. During the
third quarter, the Company opened a new commercial lending office in
                                                                            

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New Haven to service the Southern Connecticut market and a new commercial office
in Providence, Rhode Island to expand its current business in that market.

Residential mortgage balances decreased by $369 million, or 20%, for the
year-to-date due to prepayments in the ongoing low rate environment. Consumer
loan balances decreased by $136 million, or 20%, primarily due to targeted
run-off of $104 million in consumer balances primarily related to indirect
automobile loans. Under the leadership of the newly recruited EVP of Consumer
Lending and Payments, the Company is expanding its mortgage originations team
and its in-market correspondent bank mortgage conduit relationships. The Company
also recently announced a partnership with fintech Upstart to begin originating
in-market unsecured consumer loans conforming to the Company's underwriting and
pricing parameters. The Company is pursuing additional consumer lending channels
as it pursues the strategies and goals set out in its BEST and Berkshire
Community Comeback programs.

The third quarter 2021 average loan portfolio yield was 3.77%, compared to 3.62%
in the fourth quarter of 2020. The improvement in yield included the benefit of
the recognition of deferred PPP fees in interest income when the related loans
were forgiven by the SBA.

The Company has designated the following industries as sensitive to direct and
indirect COVID-19 impacts: hospitality, Firestone (specialty equipment lending),
restaurants, and nursing/assisted living facilities, which collectively totaled
$734 million at period-end, compared to $868 million at the start of the year.
Hospitality loans totaled $308 million at period-end and Firestone loans totaled
$178 million at period-end.

Asset quality and provision for credit losses: Key asset quality indicators have improved in the first nine months of 2021, trending towards pre-pandemic levels. Total unaccounted for loans fell below pre-2019 year-end pandemic levels, falling to $ 37 million and measuring 0.54% of end-of-period loans.

Accruing delinquent loans decreased to $22 million from $28 million, measuring
0.33% of total loans at period-end. Net loan charge-offs decreased to $2 million
in the most recent quarter. Nine month net loan charge-offs decreased
year-over-year from $21 million to $17 million, measuring 0.30% of average loans
in 2021. Accruing troubled debt restructurings totaled $19 million at
quarter-end, which was little changed from $18 million at year-end 2020.

Total COVID-19 loan modifications decreased to $65 million at period-end, or
0.95% of loans, compared to $316 million at the start of the year. Period-end
loan modifications were concentrated in hospitality loans, which had $51 million
in modifications at that date. Most of these loans were supported by interest
reserves and were granted full year principal payment deferrals for 2021 to
allow seasonal properties to recover and to allow newer properties additional
time to achieve targeted stabilized income targets.

Criticized loans decreased to $265 million at period-end, compared to $359
million at year-end 2020, measuring 3.9% of total period-end loans. This balance
includes classified loans, which decreased to $157 million, compared to $250
million at year-end 2020, measuring 2.3% of total period-end loans. Loans to
COVID sensitive industries comprised approximately 44% of criticized balances.
Recent reductions in classified loans were due to a combination of exit
strategies and upgrades of hospitality loans. The Company has traditionally
viewed its potential problem loans as those loans from business activities which
are rated as classified and continue to accrue interest. These loans have a
possibility of loss if weaknesses are not corrected. Accruing classified loans
totaled $120 million at period-end, compared to $185 million at year-end 2020.

The allowance for credit losses on loans decreased by $14 million, or 11%, to
$113 million during the first nine months of the year. The ratio of the
allowance to total loans measured 1.65%, compared to 1.58% at the start of the
year. The Company's allowance methodology includes an assessment of the risk of
adverse developments and consideration of qualitative factors. The 1.65% ratio
of the allowance to total loans remains higher than the 0.94% ratio following
the adoption of CECL and prior to the emergence of the pandemic. The Company
anticipates that the allowance ratio will decline in the coming year, depending
on economic and qualitative factors, and depending on the portfolio mix.

Deposits and Borrowings: Berkshire has been pursuing a course of reducing higher
cost wholesale funds by paying off brokered time deposits and FHLB borrowings as
they mature. In the third quarter, the Company also
                                                                            

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prepaid most borrowings from the Federal Home Loan Bank of Boston ("FHLBB"). For
the year-to-date, total wholesale funds decreased by 64% from $1.182 billion to
$428 million. Included in this total are brokered deposits, which decreased from
$611 million to $317 million, most of which is scheduled to mature over the next
year.

Total deposits increased by $150 million, or 1%, to $10.37 billion in the first
nine months of the year. Excluding the above change in brokered deposits, total
deposits increased by $443 million, or 5%. Non-interest bearing checking
accounts increased by $539 million, or 22%. This included growth of both
personal and commercial checking balances and benefited from the further
accumulation of liquidity from federal fiscal stimulus payments. NOW and money
market balances shifted due to the impact of the calendar on daily payroll
deposits. Time deposits decreased by $559 million, consisting mostly of the
reduction in brokered time deposits, and savings balances increased as maturing
time deposits shifted into checking and savings accounts.

Most of the $1.5 billion balance of non-brokered time deposits at period-end is
scheduled to mature in the next twelve months. These balances comprise
approximately 15% of total non-brokered deposits. The higher costs of these
older time accounts are targeted to be replaced with lower costing balances
reflecting current lower interest rates. The total cost of deposits decreased to
0.22% in the most recent quarter from 0.47% in the fourth quarter of 2020. The
cost of borrowings increased to 3.89% from 2.50% due to the impact of remaining
higher cost subordinated debt as shorter term borrowings matured or were
prepaid. The total cost of funds decreased to 0.31% from 0.60%.

At year-end 2020, liabilities held for sale and assets held for sale included
deposits and loans held for sale pursuant to the contract for the sale of the
Mid-Atlantic branch operations. This sale was completed in the most recent
quarter.

Derivative Financial Instruments: There were no material changes in the
portfolio of outstanding derivative financial instruments, which totaled $3.7
billion in notional amount at period-end. The estimated fair value of these
instruments was an asset of $55 million at period-end, which decreased from $94
million at year-end 2020 due to the impact of rising medium term interest rates
on the value of outstanding commercial loan interest rate swaps.

Shareholders' Equity: Total shareholders' equity decreased by $10 million, or
1%, to $1.18 billion during the first nine months of 2021. Berkshire earned $98
million in income during this period, including the $38 million after-tax gain
on the sale of operations. Berkshire paid out $87 million to shareholders
through stock repurchases and dividend payments. Additionally, the Company
recorded a $24 million decrease in accumulated other comprehensive income due to
the after-tax impact of a reduction in unrealized debt security gains resulting
from the increase in medium term interest rates during the first nine months of
the year.

During the second quarter, Berkshire announced a board authorization for the
repurchase of 2.5 million shares, or approximately 5% of outstanding shares. The
Company completed this repurchase in the third quarter, paying an average price
of $27.48 per share, totaling $69 million, for the repurchase of the 2.5 million
shares.

Total risk-weighted assets decreased year-to-date, reflecting a decline in total
assets and the impact of the temporary shift towards lower risk assets as loan
balances have shifted into short-term investments. As a result, capital metrics
improved over the nine months. The common equity tier 1 capital ratio improved
to 15.3% from 13.8% at the start of the year, and is viewed as comparatively
very strong in relation to peer institutions.

Book value per share at the end of the period totaled $ 24.21 and the non-GAAP measure of tangible book value per measured share $ 23.58. Both of these measures increased by 4% in the first nine months of the year.

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COMPARISON OF OPERATING RESULTS FOR THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER
30, 2021 AND SEPTEMBER 30, 2020

Summary: Berkshire recorded net income of $ 64 million, Where $ 1.31 per diluted share, in the third quarter of 2021. This is an increase compared to $ 21 million, Where $ 0.42 per share, in the third quarter of 2020. The increase is mainly due to $ 38 million in after-tax earnings, or $ 0.78 per share, recognized at the time of the sale at the end of August 2021 of Berkshire insurance operations and Mid-Atlantic branch operations.

The Company uses the non-GAAP measure of adjusted earnings to assess its
performance. This measure excludes items not viewed as related to ongoing
operations. Third quarter adjusted earnings per share was unchanged at $0.53 in
both 2021 and 2020. Lower adjusted revenue in 2021 was offset by a favorable
change in the provision for credit losses on loans. The above sale gains are
excluded from adjusted revenue and earnings. Other major exclusions are merger,
restructuring, and other expense.

Nine month results in 2020 were a loss of $548 million, or $10.90 per share, due
primarily to credit loss provision and goodwill charges in the first half of the
year stemming from the onset of the COVID-19 global pandemic. Nine month results
in 2021 were profitable, with net income of $98 million, or $1.97 per share. In
2021, both GAAP and adjusted quarterly earnings reaching the highest level in
the third quarter, including the benefit of improving credit quality as pandemic
economic recovery has strengthened.

The third quarter efficiency ratio increased year-over-year to 68.8% from 65.4%,
and the nine month ratio increased to 69.3% from 67.7%. This primarily reflected
lower revenue from net interest income. Return on assets and return on tangible
equity improved year-over-year from the first half 2020 loss, and benefited from
the sale gains and the credit to the loan loss provision in the third quarter of
2021. The third quarter 2021 return on assets was 2.14% and return on equity was
22.2%. The non-GAAP measure of adjusted return on assets was 0.86% and the
non-GAAP measure of adjusted return on tangible equity was 9.5%.

Revenue: Total net revenue increased year-over-year by $48 million, or 49%, in
the third quarter and by $60 million, or 21%, in the first nine months of the
year. This included the benefit of the $52 million in net gains on the sale of
insurance and branch operations. The Company's non-GAAP measure of adjusted
revenue excludes gains and losses on securities and on sales of operations.
Adjusted net revenue decreased year-over-year by $5 million, or 5%, in the third
quarter and by $1 million, or 1%, in the first nine months of the year. Lower
net interest income was partially offset by higher fee revenue. Revenue in 2021
included the approximate impact of the loss of approximately $2 million in
revenues from insurance and branch operations which were sold at the end of
August 2021.

Net Interest Income: Net interest income decreased year-over-year by $6 million,
or 7%, in the third quarter and by $19 million, or 8%, in the first nine months
of the year. The third quarter change was primarily due to a decrease in average
earning assets, which decreased by 5% year-over-year. This reflected the use of
funds from loan run-off to paydown higher cost wholesale funds, together with
the reduction in assets related to the branch sale. Additionally, the third
quarter net interest margin decreased year-over-year by 5 basis points to 2.56%,
due to the shift towards lower risk and shorter duration assets.

The decrease in nine month net interest income was primarily due to a decrease
in the net interest margin to 2.60% from 2.75%. This primarily reflected the
ongoing impact from the 42 basis point contraction in the net interest margin in
the second quarter of 2020 following the approximate 150 basis downward parallel
shock in interest rates in March 2020 due to pandemic related emergency federal
monetary interventions.

The yield on earning assets has decreased steadily over the last five quarters,
reflecting ongoing yield compression in the low rate environment, together with
the shift in mix with lower loans and higher short-term investments. This has
been partially offset by higher income on PPP loans in the last three quarters
due to the recognition of deferred revenues when PPP loans were forgiven by the
SBA. These loans contributed 11 basis points to the margin in the first and
second quarters of 2021, falling to 5 basis points in the most recent quarter.
There was no remaining material balance of deferred PPP revenue at period-end.

                                                                            

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The Company's liability management strategies have been focused on supporting
the net interest margin to offset asset yield compression. Deposit costs have
been repriced down and the Company benefited from higher non-interest bearing
checking account balances, which increased year-over-year in the third quarter
to 29% of average deposits from 24%.

The Company has focused on paying down higher cost wholesale funds as well as
lowering the cost of maturing retail time deposits, which have been
comparatively high sources of funding in recent years. The Company expects to
benefit from the prepayment of FHLBB borrowings which occurred near the end of
the most recent quarter. Additionally, the $1.8 billion remaining balance of
time deposits at period-end represent further potential opportunity to reduce
funding costs compared to peer institutions.

Non-Interest Income: Non-interest income increased year-over-year by $54 million
in the third quarter and by $79 million in the first nine months of the year.
This includes the $52 million benefit of net gain on sales of business
operations in the most recent quarter, and the cost of $10 million in securities
losses in the first half of 2020.

Total non-interest income before gains and losses increased year-over-year by $1
million, or 4%, in the third quarter and by $18 million, or 34%, in the first
nine months of the year. For the third quarter, SBA loan originations related
income increased year-over-year by $3 million to a record level of $5 million,
compared to pandemic depressed business volumes in 2020. Third quarter deposit
related fees increased year-over-year by 8% and wealth management fees increased
15% due to improved business conditions. This growth helped offset a 41%
reduction in insurance commissions due to the sale of insurance operations,
along with a 77% decrease in mortgage banking revenue from elevated business
volumes in 2020.

The nine month improvement in non-interest income before gains and losses was
primarily due to improvements in the first half of 2021 from the pandemic
emergency conditions in the first half of 2020, which resulted in contractions
in business activity, fee waivers, and charges resulting from negative price
movements in fair valued financial instruments, including derivative financial
instruments and other fair valued assets. Additionally, the Company recorded $2
million in PPP referral fees in the first half of 2021 for its participation in
the second round of the PPP program, channeling applications through a fintech
partner rather than maintaining PPP loans on its balance sheet as it did in
2020.

Credit Loss Provision Expense: The third quarter provision was a benefit of $4
million in 2021 compared to an expense of $1 million in 2020. For the first nine
months of the year, the provision expense was $3 million in 2021 compared to $66
million in 2020. The provision was elevated in the first half of 2020, as the
Company estimated expected loan losses in the context of the global pandemic.
The Company continues to maintain an elevated allowance compared to loans based
on its methodology. Because of the decline in the loan portfolio, there has been
little need for additional provision expense in 2021. The benefit in the most
recent quarter reflected a further reduction in loans as well as the improving
economic outlook.

Non-Interest Expense and Tax Expense: Non-interest expense decreased
year-over-year by $3 million, or 5%, for the third quarter and by $552 million
for the first nine months of the year. The third quarter decrease was due to
lower merger, restructuring and other non-operating expenses. These costs in
2020 were primarily related to the CEO separation and in 2021 were primarily
related to net restructuring costs including borrowings prepayment fees, real
estate consolidation plans, and severance. The $552 million nine month decrease
was primarily due to the $554 million goodwill write-off in the second quarter
of 2020.

The Company's non-GAAP measure of adjusted non-interest expense excludes the
above costs, which are not viewed as related to ongoing operations. Adjusted
non-interest expense increased year-over year by $1 million, or 1%, for the
third quarter and by $2 million, or 1%, for the first nine months of the year.
Expense benefited from the sale of insurance and branch operations at the end of
August 2021. Third quarter expense was up primarily due to a 6% increase in
salary expense including the impact of the Company's investment in front line
bankers. The nine month increase in expense primarily reflected higher
professional expense in the first half of the year for legal, financial, and
other advisory services related to management and board matters.

The Company has completed the consolidation of 16 branch offices in 2021. The
Company sold 8 offices as part of the Mid-Atlantic branch sale. Total branch
offices declined from 130 to 106 for the year-to-date, as the Company
                                                                            

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pursues its strategy for front-line bankers in managing expansion and market
positioning. This includes a focus on its MyBankers who provide dedicated
relationship support to customers with committed banking relationships. Full
time equivalent staff totaled 1,333 positions at period-end, compared to 1,505
positions at the start of the year. This decrease included 79 positions which
were transferred in conjunction with the sale of insurance and branch
operations. The Company designated ten real estate properties as held for sale
in the third quarter as it pursues its efficiency strategies for reducing
overhead and evolving a hybrid work environment. A severance accrual was
recorded during the quarter in conjunction with planned efficiencies in
servicing customer accounts in partnership with third parties.

The Company received income tax expense benefits in 2020 due to loss carrybacks
resulting from the losses reported in 2020. The effective tax rate was 20% in
the third quarter of 2021 and 21% for the first nine months of the year. The
effective tax rate on adjusted pre-tax income was 12% in the third quarter of
2021 and 19% for the first nine months of the year. The higher GAAP tax rate
reflected the higher GAAP pre-tax income primarily related to the net sale gains
for the sale of the insurance and branch operations. Berkshire invested in two
historic rehabilitation tax credit projects in the most recent quarter,
resulting from increased rehabilitation project activity which had declined
following the onset of the pandemic. These programs serve community needs in
Albany, NY and Westerly, RI. They provided $2 million in tax benefits in the
most recent quarter, which resulted in $0.01 in additional EPS net of related
amortization charges included as a component of non-interest income.

Discontinued Operations: In the fourth quarter of 2020, the Company completed
the exit of its national mortgage banking operations. These operations generated
a net loss of $20 million in 2020, of which $2 million was recorded in the third
quarter and $16 million was recorded in the first nine months of 2020. These
operations are excluded from the Company's measures of adjusted income.

Total Comprehensive Income: Total comprehensive income includes net income
together with other comprehensive income, which primarily consists of unrealized
gains/losses on debt securities available for sale, after tax. The decrease in
interest rates in 2020 resulted in $20 million in other net after-tax nine month
comprehensive income and the increase in medium term interest rates in 2021
resulted in a $24 million nine month other net comprehensive loss.

Liquidity and Cash Flows: The primary sources of cash in the first nine months
of 2021 were the decrease in total loans and the increase in demand deposits,
and the primary uses of cash were the reduction of wholesale funds and an
increase in short-term investments, as well as the settlement of the branch
sale. As a result, liquidity increased, with short-term investments increasing
to 17% of total assets and total investments increasing to 36% of assets at
period-end, from 11% and 29%, respectively, at the start of the year. The ratio
of loans to deposits decreased to 66% from 79%. The ratio of wholesale funds to
assets decreased to 4% from 9%.

The Company anticipates repaying most of the $428 million in wholesale funds
over the next twelve months. The Company is targeting to resume loan growth in
2022, and to shift some funds from short-term investments into investment
securities. The Company anticipates that excess liquidity will decline in 2022
based on these targeted events. The Company regularly stress tests its liquidity
and views its stressed liquidity profile as sound including the benefit of
current excess levels of liquidity.

At period-end, unused borrowing capacity at the FHLBB was $1.6 billion, which
was unchanged from the start of the year. Borrowing availability at the Fed
discount window was $0.5 billion and $0.8 billion for these dates respectively.
Total cash held by the holding company was $77 million and $84 million for these
respective dates. The Company targets to use cash at the holding company
together with dividends from the Bank to fund dividends and potential stock
repurchases over the coming year.


                                                                            

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Capital Resources: Please see the "Shareholders' Equity" section of the
Comparison of Financial Condition for a discussion of shareholders' equity
together with the note on Shareholders' Equity in the consolidated financial
statements. Additional information about regulatory capital is contained in the
notes to the consolidated financial statements and in the Company's most recent
Form 10-K.

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

The Company's long term goal is to maintain a competitive capital stack and to
provide a return in excess of the cost of its common equity capital. The
Company's tier 2 capital includes a $75 million subordinated note which converts
to a convertible rate and becomes callable as of September 2022. The Company
will monitor capital markets conditions while assessing future plans for this
capital.

The Company and Bank are investment grade rated by the KBRA bond rating service
and the Company views itself as having good access to current capital markets.
The Company performs capital stress testing at least annually and has a general
goal to remain qualifying for the "well capitalized" designation in the severely
stressed scenario. The Company views its current stressed capital position as
sound and conforming to its objectives, including the benefit of current excess
levels of capital.

In acting as a source of strength for the Bank, the Company relies in the long
term on capital distributions from the Bank in order to provide operating and
capital service for the Company, which in turn can access national financial
markets to provide financial support to the Bank. Capital distributions from the
Bank to the parent company presently require approval by the FDIC and the
Massachusetts Division of Banking.

Off-Balance Sheet Arrangements and Contractual Obligations: In the normal course
of operations, Berkshire engages in a variety of financial transactions that, in
accordance with generally accepted accounting principles are not recorded in the
Company's financial statements. These transactions involve, to varying degrees,
elements of credit, interest rate, and liquidity risk. Such transactions are
used primarily to manage customers' requests for funding and take the form of
loan commitments and lines of credit. Further information about the Company's
off-balance sheet arrangements and information relating to payments due under
contractual obligations is presented in the most recent Form 10-K. Changes in
the fair value of derivative financial instruments and hedging activities are
included on the balance sheet and information related to these matters is
reported in the related footnote to the consolidated financial statements, and
was included in management's discussion of changes in financial condition. There
were no major changes in off-balance sheet arrangements and contractual
obligations during the nine months of 2021 except for the completion of the
agreement to sell the Mid-Atlantic branch operations, which was completed at the
end of August 2021.

Fair Value Measurements: Fair value measurements are discussed in the related
financial statement footnote. The most significant measurements of recurring
fair values of financial instruments primarily relate to securities available
for sale, loans held for sale, and derivative instruments. These measurements
were generally based on Level 2 market-based inputs. The premium or discount
value of loans has historically been the most significant element of this
period-end presentation. This premium or discount is a Level 3 estimate and
reflects management's subjective judgments.


                                                                            

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LIBOR BASED INSTRUMENTS

The Company's use of LIBOR based instruments and the industry-wide transition
program off of LIBOR were discussed in Item 1 ("Business") and Item 1-A ("Risk
Factors") of the Company's most recent report on Form 10-K. The Company has in
excess of $5 billion in notional balances of LIBOR based instruments related
primarily to its commercial banking operations. These include loans priced off
of LIBOR, as well as interest rate swap contacts including customer, dealer, and
risk participation agreements. The Company has no material LIBOR based contracts
requiring remediation prior to year-end 2021.

The Financial Conduct Authority ("FCA") presently intends to continue publishing
most LIBOR indices through June 2023 for use with legacy instruments contracted
in 2021 or before. The Company continues to develop and execute plans to
transition instruments associated with LIBOR to alternative reference rates. The
Company expects that LIBOR based instruments issued after year-end 2021 will
utilize a different pricing index, and it is working actively with customers and
its core systems provider to prepare for this transition. The Company has begun
incorporating SOFR in place of LIBOR in new contracts and contract proposals.
The Company continues to monitor additional index rates as they become available
or are requested by customers or other counterparties.

CORPORATE RESPONSIBILITY UPDATE

Berkshire Bank is committed to purpose-driven, community-centered banking that
enhances value for all stakeholders as it pursues its vision of being the
leading socially responsible community bank. Learn more about the steps
Berkshire is taking at berkshirebank.com/csr and in its most recent Corporate
Responsibility Report.

The main developments of the quarter include:

•Launch of the BEST Community Comeback: Berkshire announced its "BEST Community
Comeback" a $5 billion multi-year ESG and community commitment to fuel
resilience and strengthen local communities. The multi-year plan focuses on four
key areas: fueling small businesses, community financing and philanthropy,
financial access and empowerment, and funding environmental sustainability.

The program includes $1.5 billion in small business lending; $2.5 billion in
mortgage lending inclusive of $200 million in lending for minority mortgage
borrowers; $2.5 billion in lending in low-moderate income neighborhoods; and
$300 million in lending for low-carbon projects. Additionally, the Bank plans to
transition its electricity supply to 100% renewables and reduce its greenhouse
gas emissions by the end of 2024.

•Xtraordinary Day: As a kickoff to the Bank's "BEST Community Comeback,"
Berkshire Bank hosted its 5th annual "Xtraordinary Day of Service." Berkshire
Bank employees were deployed in a virtual setting, volunteering for causes that
support the small business ecosystem, equity and inclusion and basic community
needs. More than 75% of Berkshires workforce participated in the day.

• Current ESG performance: the Company continued to improve its environmental, social and governance (ESG) ratings, generally outperforming its peers. From
September 30, 2021 the Company has received the following ratings: MSCI ESG-BBB; ISS ESG Quality Score – Environment: 2, Social: 1, Governance: 2; and Bloomberg ESG Disclosure – 47.81. The company is also rated by Sustainalytics.

APPLICATION OF CRITICAL ACCOUNTING POLICIES
The Company's significant accounting policies are described in Note 1 to the
consolidated financial statements included in its most recent Annual Report on
Form 10-K. Modifications to significant accounting policies made during the year
are described in Note 1 to the consolidated financial statements included in
Item 1 of this report. The preparation of the consolidated financial statements
in accordance with GAAP and practices generally applicable to the financial
services industry requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues, and expenses, and
to disclose contingent assets and liabilities. Actual results could differ from
those estimates.

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Management has identified the Company's most critical accounting policies as
related to:
• Allowance for Credit Losses
• Fair Value of Financial Instruments

These particular significant accounting policies are considered most critical in
that they are important to the Company's financial condition and results, and
they require management's subjective and complex judgment as a result of the
need to make estimates about the effects of matters that are inherently
uncertain. Both of these most critical accounting policies were significant in
determining income and financial condition based on events in 2021.

ENTERPRISE RISK MANAGEMENT
Following sections of this report on Form 10-Q include discussion of market risk
and risk factors. Risk management is overseen by the Company's Chief Risk
Officer, who reports directly to the CEO. This position oversees risk management
policy, credit, compliance, and information security. Enterprise risk
assessments are brought to the Company's Enterprise Risk Management Committee,
and then are reported to the Board's Risk Management and Capital Committee. The
high level corporate risk assessment focuses on the following material business
risks: credit risk, interest rate risk, price risk, liquidity risk, operational
risk, compliance risk, strategic risk, and reputation risk, with the credit risk
category having the highest weighting. Based on management's recent review, all
risks were within corporate appetites. Increases in risks were noted for credit
risk and compliance risk over the past year due largely to the pandemic;
liquidity risks were declining due to elevated liquid assets. For all material
business risks, residual risk was viewed as medium/low to medium due to
mitigating controls functioning in the Company.
                                                                            

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