Executive Summary

Q4 delivered solid operating performance: Operating EPS rose to $0.60 (+3% q/q; +28% y/y) on higher fees and lower operating expenses; GAAP EPS was $0.46, reflecting $6.6M of merger-related expenses .
Net interest margin compressed 2 bps sequentially to 3.14% as asset yields fell; funding costs declined 17 bps and deposit costs fell 12 bps, setting up expected modest NIM expansion in Q1 per management .
Core asset quality remained strong: NCOs fell to 0.14% (q/q down from 0.24%); NPLs stable at 0.26%; delinquencies+NPLs improved to 0.52%, the lowest in nearly two decades .
Strategic catalysts: merger-of-equals with Brookline (closing expected 2H25) and a $100M equity raise lifted CET1 to 13.0% and TCE/TA to 9.4%; dividend maintained at $0.18 .
Consensus estimate comparison: S&P Global consensus could not be retrieved via our connector at this time; management noted comfort with 2025 consensus net income cited in the Dec-16 MOE presentation .

What Went Well and What Went Wrong

What Went Well
- Operating leverage improved: Operating EPS up 3% q/q and 28% y/y on +8% q/q operating fee growth (SBA gains) and -2% q/q operating expenses; efficiency ratio improved to 62.4% from 63.7% .
- Funding traction: Average deposits +3% q/q; deposit costs -12 bps; funding costs -17 bps; management expects modest NIM expansion in Q1 as rates fall .
- Credit quality resilience: NCOs declined to 0.14% (vs. 0.24% q/q); delinquencies+NPLs at 0.52% of loans, lowest in nearly 20 years; ACL/loans stable at 1.22% .
- Management quote: “Berkshire continued its positive momentum… a year-over-year 28% increase in fourth quarter operating EPS… benefited from strong credit discipline [and] rigorous expense management.” .
What Went Wrong
- NIM/earning asset yield pressure: NIM fell 2 bps to 3.14% as earning asset yield declined 20 bps and loan yields fell 23 bps; GAAP net interest income declined $1.2M q/q to $86.9M .
- Non-interest income optics: GAAP non-interest income fell $14M q/q due to a $16M branch sale gain in Q3 (optical headwind); operating non-interest income did improve $1.7M q/q .
- Merger costs: GAAP non-interest expenses rose $6M q/q on $6.6M merger-related costs; operating expenses were down $1.2M q/q .
- Seasonality caveat: End-of-period deposits benefited from ~+$500M seasonal payroll balances (typical year-end pattern), inflating period-end totals versus normal levels .

Financial Results

Note: “Revenue” shown as Total Net Revenue (GAAP). Operating EPS is non-GAAP as reconciled by the company.

Metric	Q4 2023	Q2 2024	Q3 2024	Q4 2024
Total Net Revenue ($MM)	$80.0	$108.7	$125.6	$110.2
Diluted EPS (GAAP, $)	$(0.03)	$0.57	$0.88	$0.46
Operating EPS (Non-GAAP, $)	$0.47	$0.55	$0.58	$0.60
Net Interest Income, non-FTE ($MM)	$88.4	$88.5	$88.1	$86.9
Non-Interest Income (GAAP, $MM)	$(8.4)	$20.1	$37.6	$23.3
Provision for Credit Losses ($MM)	$7.0	$6.5	$5.5	$6.0
Non-Interest Expense (GAAP, $MM)	$79.0	$70.9	$72.0	$77.6
Net Interest Margin (FTE, %)	3.11%	3.20%	3.16%	3.14%
Efficiency Ratio (Operating, %)	67.77%	63.40%	63.74%	62.43%

KPIs and Balance Sheet/Capital

KPI	Q4 2023	Q2 2024	Q3 2024	Q4 2024
Loans (End, $MM)	$9,040	$9,229	$9,212	$9,385
Deposits (End, $MM)	$10,633	$9,621	$9,577	$10,375
Loans/Deposits (%)	85%	96%	96%	90%
NPLs / Total Loans (%)	0.24%	0.23%	0.26%	0.26%
Net Charge-offs / Avg Loans (QTD, %)	0.20%	0.07%	0.24%	0.14%
ACL / Total Loans (%)	1.17%	1.22%	1.22%	1.22%
CET1 Ratio (%)	12.0%	11.6%	11.9%	13.0%
TCE / TA (%)	8.0%	8.16%	9.10%	9.40%
Tangible BVPS ($)	$22.82	$23.18	$24.53	$24.82
Effective Tax Rate (Quarter)	75.7%	23.1%	22.1%	26.1%

Context versus prior quarters (Q2 and Q3 2024): Q3 operating EPS rose to $0.58 with a $16M non-operating branch sale gain boosting GAAP non-interest income; Q2 saw NIM improve to 3.20% with operating expense reductions and higher SBA gains .

Estimates: S&P Global consensus data were not available via our connector at this time; thus, estimate comparisons are not shown. Management indicated comfort with 2025 consensus net income referenced in the Dec-16 MOE deck .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Line-item guidance	FY2025	Company historically provided line-item outlook	Company will not provide line-item guidance due to pending MOE; confirms comfort with 2025 consensus net income cited in Dec-16 MOE presentation	Suspended detail; qualitative confirmation
Net Interest Margin	Q1 2025	N/A	“Modest expansion” expected, driven by declining funding costs	Positive outlook
Effective Tax Rate	FY2025	N/A	~22%–23% expected (Q4 elevated to 26% due to nondeductible merger costs)	New quantitative guide
Share Repurchases	2025 (pre-close)	$17.4M repurchased in 2024; below TBVPS	Do not anticipate repurchases until merger closes	Lower
Dividend	Ongoing	$0.18 declared in Q4 2024	$0.18 declared, payable Mar 6, 2025	Maintained
MOE Timing	Close	N/A	Expected close in 2H25, subject to approvals	New transaction timeline

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3 2024)	Current Period (Q4 2024)	Trend
Deposit gathering & digital	Average deposits +1% q/q (Q3); product/channel progress; branch sale completed; deposit mix shifting	Average deposits +3% q/q; deposit costs -12 bps; digital deposits >$60M; broad-based product/channel growth including commercial, private bank, and new digital channel (~15% of retail generation)	Improving
NIM & funding costs	Q2 NIM +5 bps to 3.20% on loan growth and securities repositioning; Q3 NIM 3.16% with higher cost of funds	NIM 3.14% (-2 bps q/q) as asset yields fell; funding costs -17 bps; mgmt expects modest NIM expansion in Q1	Stabilizing with positive near-term bias
Credit quality & charge-offs	Q2 NCOs 0.07%; ACL/loans up to 1.22%; Q3 NCOs 0.24% with Upstart sale impact; NPLs 0.26%	NCOs 0.14%; delinquent+NPLs 0.52% (best in ~20 years); normalized charge-offs targeted ~20 bps LT; Upstart reserves >50% of remaining balances; considering further Upstart sale	Strong/stable
CRE/Office risk	CRE concentration managed near 300%; NPLs low; diversified collateral (prior commentary)	Office maturities: none criticized in 2025; ~$3M criticized in 2026; suburban/Class A exposure; WA LTV ~60%	Controlled
Capital & TBV	TCE/TA 8.2% (Q2) → 9.1% (Q3); TBVPS $24.53 (Q3)	CET1 13.0% (+110 bps q/q) on $100M equity raise; TCE/TA 9.4%; TBVPS $24.82 (+1% q/q; +9% y/y)	Improving
Expenses	Q2/Q3 operating expense discipline; efficiency 63–64%	Operating expense -$1.2M q/q; efficiency 62.4%; sustaining momentum into 2025 (no major changes)	Improving
Strategic actions (MOE)	Branch sale executed Q3; portfolio cleanup incl. Upstart sale	Announced MOE with Brookline (2H25 close expected); synergy target cited in presentation (below 50% ER in 2026 for combined) in management remarks	Transformational

Management Commentary

Strategic message: “Berkshire continued its positive momentum… 28% increase in fourth quarter operating EPS… cumulative benefit of ongoing growth initiatives together with strategic optimization… strong credit discipline, rigorous expense management, investments in… bankers and enhancements to our digital platform” .
MOE rationale: “Merger of equals… create a preeminent Northeast banking franchise… strong response from investors and successfully executed a capital raise of $100 million… a reflection of confidence in our plans” .
Outlook on margins: “We are expecting some modest expansion in the NIM as we move forward into Q1, primarily through decreases on the funding side” .
Credit normalization: “We believe [normalized charge-offs] should be in the range of 20 bps” .
Guidance approach: “We will not be providing line item… guidance… we are encouraged by the momentum… and confirm comfort with the consensus net income cited in the December 16 merger presentation for 2025” .

Q&A Highlights

Deposit seasonality and composition: Year-end payroll deposits ~+$500M above normal (typical to reach ~$1.5B vs ~$1.0B average), inflating period-end balances .
Funding/NIM path: Management expects modest NIM expansion in Q1 driven by funding cost declines; December spot NIM was 3.18% .
Digital deposits: Program >$60M with pricing aligned to retail/commercial offerings; better-than-national average DDA sizes; built on upgraded tech stack to mitigate fraud/attrition .
Office portfolio: No criticized maturities in 2025; ~$3M in 2026; largely suburban/Class A, WA LTV ~60% .
Expenses/Tax rate: Expense discipline to continue; 2025 effective tax rate ~22–23% (Q4 elevated by nondeductible merger costs) .
Balance sheet actions: No additional actions anticipated ahead of MOE close .

Estimates Context

S&P Global consensus data were not available via our connector at this time; as a result, quantitative comparisons to consensus for Q4 2024 are unavailable. Management stated they are “comfortable with the consensus net income cited in the December 16 merger presentation for 2025” .
Given expected funding cost relief and management’s NIM outlook for Q1, estimate models may need to reflect modest near-term NIM expansion; however, lack of retrieved S&P consensus precludes a formal beat/miss assessment .

Key Takeaways for Investors

Core earnings momentum intact: Operating EPS up 28% y/y with improving efficiency (62.4%) and resilient fee growth (notably SBA), supporting ongoing operating leverage .
Funding tailwinds emerging: Deposit/funding costs fell q/q; management anticipates modest NIM expansion in Q1 as CDs and wholesale maturities roll and rates ease .
Clean credit with conservative posture: Low NPLs (0.26%), improving NCOs (0.14%), stable ACL (1.22%), and Upstart runoff largely de-risked; normalized NCOs targeted ~20 bps .
Capital strengthened into MOE: CET1 13.0% and TCE/TA 9.4% post $100M raise; TBVPS up 9% y/y; dividend maintained at $0.18 .
MOE is the medium-term catalyst: Synergies and scale (combined ~$24B assets) aim to push combined efficiency ratio below 50% in 2026; close expected 2H25, timing could be a stock driver .
Near-term trading setup: Expectation of NIM stabilization/expansion and fee momentum vs. seasonal deposit unwind and merger-cost noise; lack of formal guidance likely concentrates focus on Q1 NII/NIM trends .
Portfolio and risk: CRE/office well-managed with low criticized maturities near-term and suburban/Class A tilt; watch for macro rate path and funding competition into 1H25 .

Additional Q4 2024 Disclosures (from 8-K/Press Release)

GAAP EPS $0.46; Operating EPS $0.60; Operating ROATCE 9.93%; CET1 13.0%; NIM 3.14% .
Loans +2% q/q to $9.4B driven by CRE and C&I; deposits +$798M q/q to $10.4B (ex-payroll/brokered +3% q/q) .
Dividend declared $0.18 per share, payable March 6, 2025 .

Sources: Q4 2024 8-K and Exhibit 99.1 press release ; Q4 2024 earnings call transcript ; Q3 2024 press release ; Q2 2024 press release ; MOE press release (Dec 16, 2024) ; Dividend press release (Feb 7, 2025) .

BERKSHIRE HILLS BANCORP INC (BHLB)·Q4 2024 Earnings Summary