[Management View]
Berkshire Hills Bancorp reported operating net income of $31.6 million for Q2 2025, up 14% from Q1 and 36% YoY. Operating earnings per share were $0.69, up 15% from Q1 and 25% YoY. Operating expenses decreased by 2% from Q1 and 7% YoY, reflecting ongoing cost control. The bank achieved positive operating leverage of 5% from Q1 to Q2 and 11% YoY. The digital deposit program added over $100 million in new deposits since its inception earlier in 2025. The merger with Brookline Bancorp is expected to deliver significant profitability, with estimated 23% earnings accretion to 2026 consensus.

[Outlook]
Management provided performance guidance, expecting the tax rate to normalize to about 24-25%. Future tangible book value dilution and earnings accretion from the merger remain partially unquantified pending FASB CECL guidance. Integration planning and regulatory approval are on schedule for a September merger closing.

[Financial Performance]
Operating net income increased 14% from Q1 and 36% YoY. Operating earnings per share rose 15% from Q1 and 25% YoY. Operating expenses decreased 2% from Q1 and 7% YoY. Net interest margin was 3.27% in Q2, up three basis points from Q1. Average loans increased $95 million (1% annualized) from Q1 and $327 million (4%) YoY. Average deposits increased 1% from Q1 and 6% YoY. Net interest income rose $2.2 million (2%) from Q1 and increased 4% YoY. Non-interest income grew $1.1 million (5%) from Q1 and $1.6 million (8%) YoY.

[Q&A Highlights]
Question 1: You had that $100 million drop in FHLB. Just remind us when in the quarter that fell and your spot margin for June?
Answer: Our spot NIM for June was about 3.22. The FHLB decline coincided with an increase in our deposits throughout the quarter, reducing the need for borrowing.

Question 2: Do you have any near-term large maturities coming due in CDs or borrowings in the next quarter?
Answer: No, nothing significant.

Question 3: Can you help us think about the jump in C&I nonperformers to $11 million from $9 million and Firestone C&I balance, nonperformers, and charge-offs?
Answer: The jump in NPLs is due to a handful of smaller credits with individual problems. Firestone C&I balance is down 15% quarter over quarter to $28 million, with NPLs at $1.3 million and net charge-offs at $900,000 for the quarter.

Question 4: Your $700 million multifamily book, anything rent-controlled in that book?
Answer: No, we have no rent control in our footprint, including New York City.

Question 5: What were the BOLI gains this quarter?
Answer: BOLI gains were about $800,000 above normal and nonrecurring.

Question 6: How should we think about the drop in SBA loan gain on sale?
Answer: We pulled some value forward from Q4 and Q1, so Q2 reflects a move back to the mean. The core business pipeline and volume look healthy.

Question 7: How should we think about the tax rate going forward?
Answer: The tax rate is elevated due to timing and merger-related aspects but should normalize to about 24-25%.

Question 8: Can you help us think about the new FASB impact on CECL updates and tangible book dilution?
Answer: The ASU hasn't been finalized yet, but it will impact the combined entity. We can't quantify it yet but are continuing to analyze it.

Question 9: Any color on deal closing timing?
Answer: We expect the closing to be in September, pending regulatory approval. Integration planning is already underway.

[Sentiment Analysis]
Analysts and management maintained a positive tone, focusing on strong financial performance, successful integration planning, and favorable merger synergies.

[Quarterly Comparison]
| Metric | Q2 2025 | Q1 2025 | YoY Change |
|----------------------------|---------|---------|------------|
| Operating Net Income | $31.6M | $27.7M | +36% |
| Operating EPS | $0.69 | $0.60 | +25% |
| Operating Expenses | $67M | $68.3M | -7% |
| Net Interest Margin | 3.27% | 3.24% | +0.03% |
| Average Loans | $9.5B | $9.4B | +4% |
| Average Deposits | $10.1B | $10.0B | +6% |
| Net Interest Income | $112.2M | $110M | +4% |
| Non-Interest Income | $23.1M | $22M | +8% |

[Risks and Concerns]
Future tangible book value dilution and earnings accretion from the merger remain partially unquantified pending FASB CECL guidance. The impact of macroeconomic headwinds on the banking industry continues to be a concern.

[Final Takeaway]
Berkshire Hills Bancorp demonstrated strong financial performance in Q2 2025, driven by increased net interest income, deposit growth, and effective cost control. The merger with Brookline Bancorp is expected to enhance profitability and deliver significant synergies. Management remains focused on strategic initiatives, including the digital deposit program, which has contributed to balance sheet strength. While future tangible book value dilution and earnings accretion from the merger are still uncertain, the bank is well-positioned for continued growth and resilience.