Berkshire Hills Bancorp (BHLB) M&A Announcement summary

Deal rationale and strategic fit

• Merger creates a $24 billion Northeast commercial banking franchise with 148 branches, strong presence in New England and Eastern New York, and top 10 deposit market share in 14 of 19 MSAs, including Boston, Providence, and Worcester.

• Combines Berkshire's stable rural funding with Brookline's commercial lending in metro markets, diversifying business and improving competitive positioning.

• Highly compatible cultures and shared community banking values are expected to drive seamless integration and stronger client focus.

• Unlocks growth opportunities through business diversification, improved market share, and enhanced economies of scale.

• The merger is positioned as a merger of equals, not a takeover, aiming to maximize shareholder value through complementary strengths.

Financial terms and conditions

• All-stock, merger-of-equals structure with a fixed exchange ratio of 0.42 Berkshire shares per Brookline share, valuing Brookline at $12.68 per share and the deal at approximately $1.14 billion.

• Berkshire will issue $100 million in new common stock at $29.00 per share to support the merger and regulatory capital ratios.

• Post-merger ownership: 51% Berkshire, 45% Brookline, 4% new investors.

• One-time merger expenses estimated at $93 million, with $10.8 million allocated for rebranding.

• Dividend will be raised post-closing to maintain Brookline shareholders' payout, with a pro forma payout ratio dropping to around 33%.

Synergies and expected cost savings

• Identified cost savings of 12.6% of combined operating expenses, or $52 million after tax, mainly from technology, operations, and professional services, with 75% realized in 2025 and 100% thereafter.

• Projected 2026 efficiency ratio improves to 48% from 62% (Berkshire) and 58% (Brookline) standalone.

• Revenue synergies expected from leveraging complementary business lines, including SBA lending, private banking, and wealth management.