The Berkshire Bank 401(k) Plan (the “Plan”) was established on April 11, 1993.

The following brief description of the Plan is provided for general information purposes only.  Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.

General

The Plan is a defined contribution plan covering all eligible employees of Berkshire Bank and subsidiaries (the “Bank” or the “Plan Sponsor”).  The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended.  Vanguard Fiduciary Trust Company serves as the Trustee of the Plan. The Vanguard Group (“Vanguard” or the “Custodian”) is the financial advisor, record keeper, and custodian of the Plan.

Contributions

Each year, participants may contribute a percent of pretax annual compensation, excluding certain types of restricted compensation, subject to certain limitations as defined by the Plan and the Internal Revenue Code (“IRC”).  The maximum participant deferral was $19,000 and $18,500 for the Plan years ended December 31, 2019 and 2018, respectively.  In addition, all employees who are eligible to make salary reductions under the Plan and who have attained age 50 before the close of the Plan year are eligible to make catch-up contributions, as defined by the Economic Growth and Tax Relief Reconciliation Act of 2001.  Participants may also contribute rollover amounts representing distributions from other qualified retirement plans and individual retirement accounts.  Participants direct the investment of their contributions into various investment options offered by the Plan.  Participants may change their rate of contribution each pay period. Participants are eligible to contribute a flat dollar amount or a percentage of their pretax annual compensation. Berkshire Bank’s 401(k) Plan offers an after-tax Roth option as an additional deferral selection. 

The Bank matches a portion of eligible employee contributions.  During 2019 and 2018, the Bank matched 100% of eligible employee contributions up to 4% of the participant’s pretax annual compensation.

DESCRIPTION OF THE PLAN (continued)

Plan Eligibility

Employees of the Bank are eligible to participate in the Plan after attaining eighteen years of age and completing ninety days of service.

A break in eligibility service occurs if an employee is not employed for a twelve consecutive month period. If the eligibility requirements had not yet been satisfied and there is a break in eligibility service, periods before the break in service will not be taken into account and the employee will have to satisfy the eligibility requirements following the break in service.

Periods during which an employee has a break in eligibility service will not count against the employee if the employee was absent because the employee was pregnant, had a child or adopted a child, was serving in the military, or provided service during a national emergency and re-employment is protected under federal or state law, and the employee returns to employment within the time required by law.  Service credit is given to employees of certain predecessor employers as described in the Plan document for participation and vesting purposes. Employees may join the Plan on the first of the month following the month in which eligibility requirements are satisfied. Rehires may rejoin the Plan on the first day of the month following the month of rehire if they were previous participants of the Plan.

Each participant’s account is credited with the participant’s contribution and allocations of (a) the Bank’s contributions, (b) the Plan’s investment earnings, (c) administrative expenses and (d) participant withdrawals. Allocations are based on participant earnings or account balances, as defined by the Plan. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

Participants direct the investment of their contributions into investment options offered by the Plan which include selected mutual funds of Vanguard and other financial advisors, and common shares of Berkshire Hills Bancorp, Inc., the parent company of the Bank.  Participants electing the Vanguard Brokerage Option can transfer vested assets to their brokerage account and invest in additional options beyond the Plan’s core lineup. Employer contributions are invested in each participant’s account according to the participant’s selected allocation. Participants may change or transfer their investment options at any time via an automated telephone system or the Custodian’s website.

DESCRIPTION OF THE PLAN (continued)

Vesting

Participants are 100% vested in all contributions plus actual earnings thereon.

Notes Receivable from Participants

Participants may borrow from their fund accounts a minimum of $1,000 per loan up to a maximum amount, which is equal to $50,000 or 50% of their vested account balance, whichever is less.  In addition, the $50,000 limit is reduced by the highest outstanding loan balance (of any previous loans made) in the previous twelve months.  The loans are secured by the balance in the participant’s accounts and bear interest at The Wall Street Journal prime rate plus one percentage point as of the loan application review date. Interest rates ranged from 4.25% to 6.50% and 4.25% to 6.25% as of December 31, 2019 and December 31, 2018, respectively. In general, principal and interest are paid ratably over a period not to exceed five years through regular payroll deductions. Loans used to finance the participant’s principal residence are repaid over a period of time, up to 20 years.

If a participant fails to make a loan repayment by its due date, the total outstanding amount of the loan including any interest that has accrued will be defaulted and deemed a distribution to the participant on the date of default; however, the balance continues to be included in notes receivable from participants until the account balances of the defaulted borrower(s) are distributed from the Plan. Deemed loans totaled $902 for the year ended December 31, 2019. There were no deemed loans for the year ended December 31, 2018. There were no loan defaults for terminated participants for the years ended December 31, 2019 and 2018.

Payment of Benefits

On termination of service due to death, disability, normal retirement, or attaining age 59½ a participant may elect to receive either a lump sum amount equal to the value of the participant’s vested interest in their account, annual installments, or defer distribution until a later date. If the vested portion of a participant’s account balance is $1,000 or less, and the participant does not provide alternative instructions to the Plan sponsor, this amount is paid as a lump sum distribution as soon as possible following termination, retirement, disability, or to the beneficiary following death.

Participants may request a benefit payment in the case of financial hardship, subject to certain limitations as defined by the Plan.

DESCRIPTION OF THE PLAN (continued)

Plan Termination

Forfeited Accounts

A summary of significant accounting policies consistently applied in the preparation of the accompanying financial statements follows.

Basis of Accounting

The accompanying financial statements have been prepared using the accrual method of accounting.

In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

SUMMARY OF ACCOUNTING POLICIES (continued)

Investment Valuation and Income Recognition

The Plan’s investments are stated at fair value. Shares of registered investment companies are valued at quoted market prices which represent the net asset value reported by the fund at year-end. Investments in Berkshire Hills Bancorp, Inc. common stock and other equities are valued at the closing market price as of the last trade date of the year.

Purchases and sales of investments are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date. Capital gain distributions are included in dividend income. Net appreciation / (depreciation) includes the Plan's gains and losses on investments bought and sold as well as held during the year.

Administrative Expenses

The Plan’s administrative expenses are paid by either the Plan or the Plan Sponsor as provided by the Plan document. Administrative fees charged to the Plan as shown on the Statements of Changes in Net Assets relate to fees charged to the participants for recordkeeping and information management or participant loan processing that are deducted from their asset balances. Investment related expenses are included in net appreciation / (depreciation) in fair value of investments on the Statements of Changes in Net Assets Available for Benefits.

The following table summarizes the valuation of the Plan’s investments by the fair value hierarchy levels as of December 31, 2019 and 2018, respectively:

December 31 ,2019			Level 1		Level 2		Level 3		Total
Money markets*			$           321,905		$               —		$                —		$          321,905
Mutual funds			141,318,333		—		—		141,318,333
Common stock*			8,752,335		—		—		8,752,335
	Total investments		$    150,392,573		$                —		$                —		$   150,392,573
December 31 ,2018			Level 1		Level 2		Level 3		Fair Value
Mutual funds**			$    110,973,960		$                —		$                —		$   110,973,960
Common stock**			8,293,580		—		—		8,293,580
	Total investments		$    119,267,540		$                —		$                —		$   119,267,540
*	As of December 31, 2019, the VGI Brokerage Option totaled $1,083,531, of which 30% was
	comprised of money markets and 70% was comprised of common stock.
**	As of December 31, 2018, the VGI Brokerage Option totaled $877,667, of which 34% was
	comprised of mutual funds and 66% was comprised of common stock.

There were no assets measured at fair value on a non-recurring basis at December 31, 2019 or 2018.  There were no transfers between categories during 2019 or 2018.

The Plan assets are held by The Vanguard Group, the Custodian of the Plan.

Bank contributions, participant elective deferrals, and participant accounts are held and administered by Vanguard Fiduciary Trust Company, who invests cash received, interest, and dividend income in accordance with participants’ instructions and makes distributions to participants. The Trustee also administers the payment of interest and principal on participants’ loans.

Certain administrative functions are performed by officers or employees of the Bank.  No such officers or employees receive compensation for such functions from the Plan.

The Plan invests in a variety of investment vehicles. Investment securities are exposed to various risks, such as interest rate, market, liquidity, and credit. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits.

The Plan's record keeper, Trustee, and Custodian, as well as the Company and Plan participants, and Crowe LLP, the auditor of the Plan’s financial statements, are each a “party-in-interest" to the Plan as defined by ERISA. Certain administrative functions are performed by employees and officers of the Bank for which no compensation was paid from the Plan. For the year ended December 31, 2019, the Bank contributed $4,150,698 to the Plan, of which none was owed to the Plan at December 31, 2019. For the year ended December 31, 2018, the Bank contributed $3,881,280 to the Plan, of which none was owed to the Plan at December 31, 2018. In addition, the Bank paid expenses in connection with the administration of the Plan, totaling $18,401 and $27,414 for the years ended December 31, 2019 and 2018, respectively. Expenses paid to the Plan’s record keeper, trustee, and custodian represent party-in-interest transactions.

The Plan has investments in common stock of Berkshire Hills Bancorp, Inc., the parent company of the Bank. At December 31, 2019 and 2018, the Plan held 243,026 shares and 286,033 shares, respectively. At December 31, 2019 and 2018, the stock value was $7,990,709 and $7,714,298, respectively. For the years ended December 31, 2019 and 2018, the purchases of stocks amounted to $1,286,580 and $1,217,472 respectively and sales amounted to $2,812,204 and $1,465,091, respectively. For the years ended December 31, 2019 and 2018, dividends earned were $226,189 and $230,979, respectively. For the years ended December 31, 2019 and 2018, realized gains were $396,602 and $320,571, respectively. In addition, certain of the investment options are managed by Vanguard.  Transactions in such investments qualify as party-in-interest transactions. Notes receivable from participants also qualify as parties-in-interest transactions.

For the year ended December 31, 2019, the rollover contributions are made up of contributions from current employees rolling their assets over into the Plan and contributions from former employees of SI Financial Group, Inc. (“SI Financial”). On May 17, 2019, the Bank acquired SI Financial. The employees of SI Financial were given credit for hours of service with their previous employer and were able to participate in the Berkshire Bank 401(k) Plan on June 1, 2019. The SI Financial 401(k) Plan participants had the option to rollover their funds into the Berkshire Bank 401(k) Plan.

For the year ended December 31, 2018, the rollover contributions are made up of contributions from current employees rolling their assets over into the Plan. Current employees have the option to transfer their funds from a previous employer’s retirement plan into the Plan.

In December 2019, a novel strain of coronavirus (“COVID-19”) was reported to have surfaced in China and has since spread to a number of other countries, including the United States. On March 11, 2020, the World Health Organization classified COVID-19 a global pandemic, which has adversely impacted the global economy by disrupting supply chains, lowering equity market valuations, creating significant volatility and disruption in financial markets, and increasing unemployment levels.  While the length and severity of this pandemic cannot be reasonably estimated, it has negatively impacted the market price of Berkshire Hills Bancorp common stock and Plan assets.

On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which included several relief provisions available to tax qualified retirement plans and their participants. The provisions of the CARES Act may be effective and operationalized immediately, prior to amending the Plan document. The Plan has adopted certain measures included in the CARES Act which allow qualified participants to receive coronavirus-related distributions without penalty and delay repayments of any new or outstanding loans for up to one year. Additionally, required minimum distributions beginning in 2020 will be delayed by one year, but may still be received at the request of a participant.

The following is a reconciliation of net assets available for benefits per the financial statements at December 31, 2019 and 2018 to Form 5500: