8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 27, 2009

BERKSHIRE HILLS BANCORP, INC.

(Exact name of registrant as specified in its charter)

Delaware	0-51584	04-3510455
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

24 North Street, Pittsfield, Massachusetts	01201
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (413) 443-5601

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On October 27, 2009, Berkshire Hills Bancorp, Inc. (the “Company”), the holding company for Berkshire Bank, announced: (1) its financial results for the quarter ended September 30, 2009; (2) the opening of its Springfield, Massachusetts regional headquarters; (3) plans to file a $150 million universal shelf registration statement with the U.S. Securities and Exchange Commission; and (4) the declaration of a quarterly dividend of $.16 per share. The press release containing these announcements is filed as Exhibit 99.1 and incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits

(a) Financial Statements of Businesses Acquired. Not applicable.

(b) Pro Forma Financial Information. Not applicable.

(c) Shell Company Transactions. Not applicable.

(d) Exhibits.

Exhibit No.		Description
	99.1	Press Release dated October 27, 2009.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	Berkshire Hills Bancorp, Inc.
DATE: October 28, 2009	By:	/s/ Michael P. Daly
		Michael P. Daly
		President and Chief Executive Officer

EXHIBIT INDEX

Exhibit No.		Description
	99.1	Press Release dated October 27, 2009

EX-99.1

Exhibit 99.1

BERKSHIRE HILLS REPORTS IMPROVED EPS IN THIRD QUARTER
OPENS SPRINGFIELD REGIONAL HEADQUARTERS
PLANS SHELF REGISTRATION FILING
Dividend Declared

Pittsfield, MA — October 27, 2009 — Berkshire Hills Bancorp (BHLB) reported third quarter 2009 net income of $1.9 million, or $0.14 per share. Included in the quarter’s results was a charge of $0.08 per share after tax resulting from the Company’s decision to accelerate the disposition of a nonperforming loan. The Company’s earnings per share were $0.22 before this charge. Quarterly earnings were also net of a $0.05 per share charge after tax related to an increase in the loan loss allowance to 1.22% of total loans from 1.16% during the quarter.

Third quarter earnings per share increased from the prior quarter results, which included charges of $1.3 million representing a special FDIC industry-wide assessment and $3.3 million in non-recurring preferred stock dividends. These dividends consisted mostly of a one-time deemed dividend which was non-cash and had no impact on stockholders’ equity, and which was related to the prepayment of preferred stock held by the U.S. Treasury. For the first nine months of the year, Berkshire reported net income of $8.1 million, or $0.63 per share before these charges. Including these charges, nine month 2009 GAAP earnings per share totaled $0.32.

THIRD QUARTER HIGHLIGHTS

• Strong quarterly growth in targeted loans and deposits

• 12% annualized commercial loan growth

• 16% annualized non-maturity deposit growth

• Significant linked quarter revenue growth

• 11% annualized growth in net interest income compared to linked quarter, with the net interest margin improving to 2.96% from 2.91% and reaching 3.03% in September

• 36% increase in fee income related to deposits, loans, interest rate swaps, and wealth management compared to linked quarter

• Continuing solid loan performance

• 0.60% nonperforming assets/assets excluding the above mentioned loan targeted for liquidation; 0.85% including this loan

• 0.42% accruing delinquent loans/loans

• 0.59% annualized net charge-offs to average loans in third quarter; 0.52% for the year-to-date

• 1.22% allowance/loans, increased from 1.16% during the quarter

BHLB — Berkshire Hills Bancorp www.berkshirebank.com

Michael P. Daly, President and Chief Executive Officer, stated, “We produced broad-based revenue increases in the third quarter, together with strong growth in targeted loans and deposits. Our franchise is well positioned to serve the needs of our markets, as we increase our market share by providing solutions in place of national providers who are less active in our region. Through careful pricing, we have begun to increase our net interest margin and we are benefiting from improved market conditions in our wealth management business. Our regional teams are seeing the benefit of community outreach over the past year, and we are pleased with the initial contributions from the new leadership that joined us in our attractive New York region in the second quarter.”

Mr. Daly continued, “Our basic operations strengthened and moved forward in the third quarter. In that context, we made a decision to accelerate the disposition of the previously mentioned secured nonperforming loan, which we hope to liquidate at a 22% discount in the fourth quarter. Our provision included a $1.9 million charge related to this loan, which was written down to $6.6 million. The performance of our other loans remained strong, and our total loan charge-offs have remained moderate. Nonetheless, we believe that the accumulating impacts of the recession and unemployment are a growing burden on many of our commercial and non-profit customers. We are expanding our portfolio monitoring as we obtain updated financial information from our customers, and we will be assessing risk management strategies actively as we evaluate the economic and financial conditions in our markets.”

Mr. Daly concluded, “We opened our new Pioneer Valley regional headquarters in Springfield last week. This well located facility will provide a convenient base for our growing team to service this market, along with other business opportunities through our relationship connections in Massachusetts and Connecticut. We also will continue to maintain a strong regional presence in our Westfield facility to service our longstanding customer base. We will be opening our new branch in our Springfield headquarters in November, and this will be a model of improvements that we are designing into our retail service delivery as America’s Most Exciting Bank^SM.”

SPRINGFIELD REGION HEADQUARTERS

Berkshire’s new Springfield region headquarters will service the Company’s 15 banking and insurance offices in its Pioneer Valley, Massachusetts region. The headquarters is located at 1259 East Columbus Avenue, and has immediate North and South-bound access to Interstate-91 from a convenient address in Springfield’s downtown business district. Springfield is among the top six metropolitan statistical areas in New England, and the Hartford-Springfield market is the second largest metro area in the region. Springfield is strategically located at the intersection of Interstate-91 which runs the length of New England and Interstate-90 which runs across New England. This headquarters will provide Berkshire with more convenient access to its customers in adjacent markets, including Hartford and Worcester. The Springfield area is an educational hub for more than 100,000 students in 29 colleges and universities. The area enjoys an attractive cost-of-living, ready airport access, and is at the crossroads of major regional and national telecommunications backbones. A public/private collaborative recently announced plans to build a green world class high performance computing facility in the region. Berkshire’s team in the region is led by Senior Vice President Thomas Creed and includes retail and commercial banking, insurance, and wealth management professionals.

BHLB — Berkshire Hills Bancorp www.berkshirebank.com

Page 2

SHELF REGISTRATION FILING

The Company plans to file a $150 million universal shelf registration with the SEC during the fourth quarter. This replaces the prior $125 million shelf registration which expired in September and which was used for common and preferred stock issuances over the last twelve months. The Company has no current plans to issue securities under this registration, but it will be available to facilitate capital offerings over the next three years as Berkshire continues to pursue attractive growth opportunities through de novo and acquisition initiatives as it increases the breadth and depth of its footprint in the attractive New England and northeastern New York financial services markets.

DIVIDEND DECLARED

The Board of Directors maintained the cash dividend on Berkshire’s common stock, declaring a dividend of $0.16 per share to stockholders of record at the close of business on November 12, 2009 and payable on November 25, 2009.

FINANCIAL CONDITION

Total assets have remained steady at $2.7 billion during 2009. A $58 million increase in securities since year-end has been funded through the utilization of short-term investments and cash flow from the planned run-off of indirect auto loans. A $137 million increase in deposits was used to reduce borrowings and short term liabilities. A second quarter common stock issuance raised $32 million which was the primary source of funds to repay $40 million of U.S. Treasury preferred stock. The Company currently has no funded participation in any federal stimulus programs; it continues to voluntarily purchase unlimited FDIC transaction account deposit insurance.

Total securities increased by $30 million in the third quarter and by $58 million for the first nine months of 2009. Berkshire has purchased high grade short duration debt securities with the expectation that funds will gradually be re-invested in loan growth. Loans totaled $2.0 billion at the most recent quarter-end, increasing by $17 million in the third quarter and decreasing by $21 million for the year-to-date. Auto loans decreased by $46 million for the year-to-date due to the planned run-off of the Company’s indirect auto portfolio. Loan growth has been concentrated mainly in commercial loans, where loan growth totaled $30 million in the third quarter (12% annualized) and $52 million for the year-to date (7% annualized). Most of this growth has been in commercial mortgages; the origination pace has picked up since the markets began to recover in the second quarter from the previous steep drop-off in activity. New York commercial originations have also benefited from the new commercial leadership which was recruited in the second quarter. Commercial loan growth offset a decline in residential mortgages, which had decreased by $49 million during the first six months due to the high volume of loan refinancing into low fixed rate loans which were sold to government agencies. The Company held more mortgages in portfolio in the third quarter and promoted jumbo mortgage originations; as a result the portfolio only declined by $2 million during the quarter. Home equity and other consumer loan outstandings increased at a 15% annualized rate during the first nine months primarily due to home equity promotions in the first half of the year.

BHLB — Berkshire Hills Bancorp www.berkshirebank.com

Page 3

Excluding the $6.6 million balance of the nonperforming loan which is expected to be liquidated, nonperforming assets measured 0.60% of total assets at September 30, 2009. Including this loan, this ratio stood at 0.85%. This is an increase from 0.42% at mid-year and 0.48% at the prior year-end. This increase is due to two condominium construction loans that became nonperforming in the most recent quarter. One of these loans is targeted for liquidation as noted above; the other loan is carried at $5.1 million, and unit sales in this project have resumed following a homeowner dispute resolution in September. Accruing delinquent loans decreased to 0.42% of total loans at quarter-end, compared to 0.66% at the prior quarter-end, due primarily to the resolution of two commercial loans which became current during the quarter. Annualized net loan charge-offs measured 0.59% in the third quarter and 0.52% for the year-to-date. Net loan charge-offs of $2.9 million in the most recent quarter included $2.3 million related to the above two construction loans. The loan loss allowance was 1.22% of total loans at quarter-end, increasing from 1.16% at the start of the quarter. The allowance provided 152% coverage of nonperforming loans at quarter-end, excluding the construction loan targeted for liquidation. Despite the generally favorable continuing performance of the loan portfolio, management believes that portfolio risk may be increasing due to the accumulating impacts of the recession, and this will be monitored as updated information is received from borrowers.

Total deposits were $2.0 billion at September 30, 2009, increasing by $15 million (at a 3% annualized rate) in the most recent quarter and by $137 million (at a 10% annualized rate) for the year-to-date. Growth was concentrated in non-maturity deposits, which grew at a 14% annualized rate for the year-to-date, including the benefit of 18% annualized demand deposit growth. The Company repriced maturing time deposits in the third quarter reflecting current market conditions, and this contributed to the $32 million decrease in these balances. By emphasizing lower cost non-maturity deposits and lowering time deposit costs, Berkshire has reduced the cost of its deposits in order to offset the impact of lower asset yields in the current low interest rate environment. Much of the year-to-date deposit growth has been concentrated in the Berkshire’s New York market, reflecting ongoing market share growth resulting from Berkshire’s de novo expansion in this attractive region.

Total stockholders’ equity was $410 million at September 30, 2009, increasing from $408 million at the start of the year. Berkshire’s equity benefited by $8 million due to an increase in the market values for the Company’s securities and derivatives contracts. During the second quarter, Berkshire raised $32 million in net proceeds from a public common stock offering and repaid $40 million in preferred stock previously issued to the U.S. Treasury. The ratio of tangible common equity to assets improved to a strong 9.3% at September 30, 2009, while the ratio of total equity to assets measured 15.3%. Tangible book value per common share improved to $16.76 from $15.73 at the start of the year. Quarter-end total book value per share measured $29.46, compared to $30.33 at the start of the year. These changes included the impact of the second quarter common stock offering, which was issued at an offering price of $21.50 per share.

RESULTS OF OPERATIONS

Third quarter 2009 net income was $1.9 million, compared to $5.3 million in the third quarter of 2008. For the first nine months of 2009, net income was $8.1 million, compared to $17.0 million in the same period of 2008. The decrease in income in 2009 was primarily related to lower net interest income, higher FDIC insurance premiums, and an increase in the loan loss provision. Earnings per share also decreased, including the impact of additional common and preferred shares issued over the last twelve months.

BHLB — Berkshire Hills Bancorp www.berkshirebank.com

Page 4

The net interest margin rebounded in the most recent quarter, increasing to 2.96% from 2.91% in the prior quarter due to the benefit of commercial loan growth and deposit gathering strategies. The year-to-year decline in net interest income was due to margin compression from 3.48% in the third quarter of 2008. The low interest rate environment has negatively impacted the Company’s asset sensitive net interest income, as management has chosen to sacrifice current yield to protect earnings in the event of future rate increases. Market deposit interest rate floors and runoff of mortgage and auto loans have also pressured margins. Income was also reduced by the elimination in 2009 of dividends from the Federal Home Loan Bank of Boston; these dividends totaled $0.7 million in the first nine months of 2008.

Quarterly non-interest income also rebounded, increasing year-to-year in the third quarter. There was also a 36% increase in fees in the most recent quarter related to deposits, loans, interest rate swaps, and wealth management fees compared to the linked quarter. Berkshire has benefited from volume growth of deposit accounts, along with the benefit of mortgage origination fees and interest rate swap fees. Wealth management fees increased due to a rebound in stock prices in the most recent quarter; assets under management increased at a 10% annualized rate for the year-to-date. Insurance fees year-to-date decreased primarily due to lower contingency income and ongoing tighter pricing conditions in the consumer and commercial markets. Insurance fee income is seasonal, with most contingency income received in the first half of the year. Non-recurring income totaled $1.2 million in 2009, primarily due to $1.0 million in fees related to the June termination of the merger agreement with CNB Financial Corp.

The loan loss provision increased in 2009, exceeding net loan charge-offs and resulting in an increase in the allowance for loan losses to 1.22% of total loans from 1.16% during the third quarter. Net loan charge-offs measured 0.52% for the year-to-date in 2009, increasing from 0.16% in the first nine months of 2008 primarily due to higher commercial loan charge-offs. Commercial loan losses annualized measured 0.75% of average loans for the current year-to-date, including 0.24% related to decisions to accelerate the disposition of problem loans.

Third quarter non-interest expense increased from year-to-year primarily due to the impact of higher FDIC premiums. The FDIC has raised its industry premium rates in 2009. Excluding these charges, all other expenses were up 4% year-to-year in the third quarter. Linked quarter compensation expense increased due primarily to higher mortgage department costs recorded as compensation expense, along with higher compensation for the expanded New York commercial team. Year-to-date expense included a $1.3 million second quarter FDIC special industry assessment ($0.06 per share after tax), as well as $0.6 million in non-core second quarter charges related to the terminated CNB merger agreement and restructuring charges. The Company recorded a $0.7 million income tax benefit in the most recent quarter, resulting in a year-to date effective tax rate of 15%. This rate was down from 29% in the same period of 2008 due to the lower level of pretax income in 2009.

CONFERENCE CALL

Berkshire will conduct a conference call/webcast at 9:00 A.M. eastern time on Wednesday, October 28, 2009 to discuss the results for the quarter and guidance about expected future results. Information about the conference call follows:

Dial-in: 800-860-2442

Webcast: www.berkshirebank.com (Investor Relations link)

BHLB — Berkshire Hills Bancorp www.berkshirebank.com

Page 5

A telephone replay of the call will be available through November 4, 2009 by calling 877-344-7529 and entering conference number: 434382. The webcast and a podcast will be available at Berkshire’s website above for an extended period of time.

BACKGROUND

Berkshire Hills Bancorp is headquartered in Pittsfield, Massachusetts. It has $2.7 billion in assets and is the parent of Berkshire Bank — America’s Most Exciting Bank^SM. The Company provides personal and business banking, insurance, investment, and wealth management services through 46 financial centers in western Massachusetts, northeastern New York, and southern Vermont. Berkshire Bank provides 100% deposit insurance protection, regardless of amount, based on a combination of FDIC insurance and the Depositors Insurance Fund (DIF). For more information, visit www.berkshirebank.com or call 800-773-5601.

FORWARD LOOKING STATEMENTS

Statements in this news release regarding Berkshire Hills Bancorp that are not historical facts are “forward-looking statements”. These statements reflect management’s views of future events, and involve risks and uncertainties. For a discussion of factors that could cause actual results to differ materially from expectations, see “Forward Looking Statements” in the Company’s 2008 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are available at the Securities and Exchange Commission’s Internet website (www.sec.gov) and to which reference is hereby made. Actual future results may differ significantly from results discussed in these forward-looking statements, and undue reliance should not be placed on such statements. Except as required by law, the Company assumes no obligation to update any forward-looking statements.

BHLB — Berkshire Hills Bancorp www.berkshirebank.com

Page 6

NON-GAAP FINANCIAL MEASURES

This news release contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles (“GAAP”). These non-GAAP measures provide supplemental perspectives on operating results, performance trends, and financial condition. They 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 included in the accompanying financial tables. In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders. The Company utilizes the non-GAAP measure of core earnings in evaluating operating trends, including components for core revenue and expense. These measures exclude amounts which the Company views as unrelated to its normalized operations, including merger costs and restructuring costs. Similarly, the efficiency ratio is also adjusted for these non-core items. Additionally, the Company adjusts core income to exclude amortization of intangibles to arrive at a measure of the underlying operating cash return for the benefit of stockholders. The Company also adjusts certain equity related measures to exclude intangible assets due to the importance of these measures to the investment community. In the first quarter of 2009, the Company adjusted core earnings per share and core return on tangible common equity to be net of preferred stock dividends. These measures were not adjusted in this manner in the second quarter of 2009. The second quarter deemed dividend was a nonrecurring non-cash charge with no impact on stockholders’ equity and did not reflect a core economic event in the Company’s view. Additionally, the Company held cash at near-zero interest rates in the second quarter while it awaited the approval of the U.S. Treasury to repay the preferred stock. Accordingly, the preferred stock cash dividend and accretion charges were viewed by the Company as non-core one-time charges against income available to common stockholders related to the process of repaying the preferred stock.

# # #

CONTACTS

Investor Relations Contact
David H. Gonci
Capital Markets Officer
413-281-1973

Media Contact
Fedelina Madrid
Vice President — Marketing
413-236-3733

BHLB — Berkshire Hills Bancorp www.berkshirebank.com

Page 7

BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED BALANCE SHEETS — UNAUDITED

	September 30,			June 30,			December 31,
(In thousands)	2009			2009			2008
Assets
Total cash and cash equivalents	$	21,857		$	30,746		$	26,582
Federal funds sold and short-term investments		4,598			36,037			18,216
Trading security		16,641			16,247			18,144
Securities available for sale, at fair value		328,446			303,546			274,380
Securities held to maturity, at amortized cost		31,535			26,851			25,872
Federal Home Loan Bank stock and other restricted securities		23,120			23,120			23,120
Total securities		399,742			369,764			341,516
Loans held for sale		1,500			8,901			1,768
Residential mortgages		625,864			627,958			677,254
Commercial mortgages		857,884			833,598			805,456
Commercial business loans		178,337			172,341			178,934
Consumer loans		324,099			334,882			345,508
Total loans		1,986,184			1,968,779			2,007,152
Less: Allowance for loan losses		(24,297	)		(22,917	)		(22,908	)
Net loans		1,961,887			1,945,862			1,984,244
Premises and equipment, net		36,062			36,197			37,448
Goodwill		161,725			161,725			161,178
Other intangible assets		15,155			15,987			17,652
Cash surrender value of life insurance policies		36,569			36,267			35,668
Derivative assets		4,181			2,765			3,741
Other assets		37,358			36,835			38,716
Total assets	$	2,680,634		$	2,681,086		$	2,666,729
Liabilities and stockholders’ equity
Demand deposits	$	264,827		$	257,133		$	233,040
NOW deposits		195,496			176,238			190,828
Money market deposits		522,901			506,100			448,238
Savings deposits		212,683			209,232			211,156
Total non-maturity deposits		1,195,907			1,148,703			1,083,262
Time deposits		770,911			802,691			746,318
Total deposits		1,966,818			1,951,394			1,829,580
Borrowings		259,559			281,860			359,157
Junior subordinated debentures		15,464			15,464			15,464
Derivative liabilities		17,991			13,838			24,068
Other liabilities		10,497			10,980			30,035
Total liabilities		2,270,329			2,273,536			2,258,304
Total preferred stockholders’ equity		—			—			36,822
Total common stockholders’ equity		410,305			407,550			371,603
Total stockholders’ equity		410,305			407,550			408,425
Total liabilities and stockholders’ equity	$	2,680,634		$	2,681,086		$	2,666,729

F-1

BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED LOAN & DEPOSIT ANALYSIS — UNAUDITED

LOAN ANALYSIS

	September 30, 2009		June 30, 2009		December 31, 2008		Annualized Growth %
							Quarter ended
(Dollars in millions)	Balance		Balance		Balance		September 30, 2009			Year to date
Total residential mortgages	$	626	$	628	$	677		(1	)%		(10)	%
Commercial mortgages:
Construction		128		135		130		(21	)		(2	)
Single and multi-family		81		67		70		83			21
Commercial real estate		649		632		605		11			10
Total commercial mortgages		858		834		805		11			9
Commercial business loans		178		172		179		14			(1	)
Total commercial loans		1,036		1,006		984		12			7
Consumer loans:
Auto		87		101		133		(55	)		(46	)
Home equity and other		237		234		213		5			15
Total consumer loans		324		335		346		(13	)		(8	)
Total loans	$	1,986	$	1,969	$	2,007		3	%		(1	)%

DEPOSIT ANALYSIS

	September 30, 2009		June 30, 2009		December 31, 2008		Annualized Growth %
							Quarter ended
(Dollars in millions)	Balance		Balance		Balance		September 30, 2009			Year to date
Demand	$	265	$	257	$	233		12	%		18	%
NOW		195		176		191		43			3
Money market		523		506		448		13			22
Savings		213		209		211		8			1
Total non-maturity deposits		1,196		1,148		1,083		16			14
Time less than $100,000		385		403		395		(17	)		(3	)
Time $100,000 or more		386		400		351		(14	)		13
Total time deposits		771		803		746		(16	)		4
Total deposits	$	1,967	$	1,951	$	1,829		3	%		10	%

F-2

BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME — UNAUDITED

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(In thousands, except per share data)	2009			2008		2009			2008
Interest and dividend income
Loans	$	25,034		$	30,078	$	76,836		$	91,224
Securities and other		3,426			3,014		10,269			9,225
Total interest and dividend income		28,460			33,092		87,105			100,449
Interest expense
Deposits		8,045			9,676		25,195			32,485
Borrowings and junior subordinated debentures		3,250			4,087		10,310			11,694
Total interest expense		11,295			13,763		35,505			44,179
Net interest income		17,165			19,329		51,600			56,270
Non-interest income
Deposit, loan and interest rate swap fees		3,286			3,079		8,220			8,185
Insurance commissions and fees		2,337			2,640		10,180			11,480
Wealth management fees		1,369			1,338		3,671			4,533
Total fee income		6,992			7,057		22,071			24,198
Other		272			174		1,092			1,042
(Loss) gain on sale of securities, net		(5	)		4		(4	)		(22	)
Non-recurring income		1			—		1,178			—
Total non-interest income		7,260			7,235		24,337			25,218
Total net revenue		24,425			26,564		75,937			81,488
Provision for loan losses		4,300			1,250		9,000			3,180
Non-interest expense
Salaries and employee benefits		9,757			9,796		28,011			29,294
Occupancy and equipment		2,674			2,760		8,661			8,502
Marketing, data processing, and professional services		2,574			2,121		6,897			6,423
FDIC premiums and special assessment		669			118		3,748			226
Non-recurring expenses		—			—		601			683
Amortization of intangible assets		833			889		2,499			2,992
Other		2,437			2,053		6,958			6,323
Total non-interest expense		18,944			17,737		57,375			54,443
Income before income taxes		1,181			7,577		9,562			23,865
Income tax (benefit) expense		(741	)		2,301		1,426			6,827
Net income	$	1,922		$	5,276	$	8,136		$	17,038
Less: Cumulative preferred stock dividend and accretion		—			—		1,030			—
Less: Deemed dividend resulting from preferred stock repayment		—			—		2,954			—
Net income available to common stockholders	$	1,922		$	5,276	$	4,152		$	17,038
Basic earnings per common share	$	0.14		$	0.51	$	0.32		$	1.65
Diluted earnings per common share	$	0.14		$	0.51	$	0.32		$	1.64
Weighted average common shares outstanding
Basic		13,806			10,303		12,977			10,330
Diluted		13,857			10,400		13,145			10,421

F-3

BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME — UNAUDITED

	Quarters Ended
	Sept. 30,			June 30,			Mar. 31,			Dec. 31,		Sept. 30,
(In thousands, except per share data)	2009			2009			2009			2008		2008
Interest and dividend income
Loans	$	25,034		$	25,370		$	26,432		$	29,343	$	30,078
Securities and other		3,426			3,395			3,448			3,419		3,014
Total interest and dividend income		28,460			28,765			29,880			32,762		33,092
Interest expense
Deposits		8,045			8,677			8,473			9,248		9,676
Borrowings and junior subordinated debentures		3,250			3,364			3,696			4,044		4,087
Total interest expense		11,295			12,041			12,169			13,292		13,763
Net interest income		17,165			16,724			17,711			19,470		19,329
Non-interest income
Deposit, loan and interest rate swap fees		3,286			2,307			2,627			2,826		3,079
Insurance commissions and fees		2,337			3,274			4,569			2,139		2,640
Wealth management fees		1,369			1,113			1,189			1,171		1,338
Total fee income		6,992			6,694			8,385			6,136		7,057
Other		272			468			352			241		174
(Loss) gain on sale of securities, net		(5	)		3			(2	)		—		4
Non-recurring income (loss)		1			1,240			(63	)		—		—
Total non-interest income		7,260			8,405			8,672			6,377		7,235
Total net revenue		24,425			25,129			26,383			25,847		26,564
Provision for loan losses		4,300			2,200			2,500			1,400		1,250
Non-interest expense
Salaries and employee benefits		9,757			8,902			9,352			8,988		9,796
Occupancy and equipment		2,674			2,859			3,128			2,736		2,760
Marketing, data processing, and professional services		2,574			2,233			2,090			1,803		2,003
FDIC premiums and special assessment		669			2,387			692			535		118
Non-recurring expenses		—			601			—			—		—
Amortization of intangible assets		833			833			833			838		889
Other		2,437			2,163			2,358			2,356		2,171
Total non-interest expense		18,944			19,978			18,453			17,256		17,737
Income before income taxes		1,181			2,951			5,430			7,191		7,577
Income tax (benefit) expense		(741	)		620			1,547			1,985		2,301
Net income	$	1,922		$	2,331		$	3,883		$	5,206	$	5,276
Less: Cumulative preferred stock dividend and accretion		—			393			637			—		—
Less: Deemed dividend resulting from preferred stock repayment		—			2,954			—			—		—
Net income available to common stockholders	$	1,922		$	(1,016	)	$	3,246		$	5,206	$	5,276
Basic earnings per common share	$	0.14		$	(0.08	)	$	0.27		$	0.44	$	0.51
Diluted earnings per common share	$	0.14		$	(0.08	)	$	0.27		$	0.44	$	0.51
Weighted average common shares outstanding
Basic		13,806			12,946			12,164			11,804		10,303
Diluted		13,857			12,946			12,247			11,892		10,400

F-4

BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
ASSET QUALITY ANALYSIS

	At or for the Quarters Ended
	Sept. 30,			June 30,			Mar. 31,			Dec. 31,			Sept. 30,
(Dollars in thousands)	2009			2009			2009			2008			2008
NON-PERFORMING ASSETS
Non-accruing loans:
Residential mortgages	$	2,399		$	2,396		$	2,740		$	1,646		$	1,315
Commercial mortgages		17,077			6,087			7,276			7,738			6,178
Commercial business loans		2,041			1,442			1,861			1,921			2,210
Consumer loans		1,089			1,326			587			866			650
Total non-accruing loans		22,606			11,251			12,464			12,171			10,353
Other real estate owned		130			130			371			498			941
Total non-performing assets	$	22,736		$	11,381		$	12,835		$	12,669		$	11,294
Total non-accruing loans/total loans		1.14	%		0.57	%		0.63	%		0.61	%		0.52	%
Total non-performing assets/total assets		0.85	%		0.42	%		0.47	%		0.48	%		0.44	%
PROVISION AND ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period	$	22,917		$	22,903		$	22,908		$	22,886		$	22,581
Charged-off loans		(2,955	)		(2,291	)		(2,643	)		(1,474	)		(1,331	)
Recoveries on charged-off loans		35			105			138			96			386
Net loans charged-off		(2,920	)		(2,186	)		(2,505	)		(1,378	)		(945	)
Provision for loan losses		4,300			2,200			2,500			1,400			1,250
Balance at end of period	$	24,297		$	22,917		$	22,903		$	22,908		$	22,886
Allowance for loan losses/non-accruing loans		107	%		204	%		184	%		188	%		221	%
Allowance for loan losses/total loans		1.22	%		1.16	%		1.16	%		1.14	%		1.15	%
NET LOAN CHARGE-OFFS
Residential mortgages	$	—		$	(27	)	$	(117	)	$	—		$	(119	)
Commercial mortgages		(2,348	)		(755	)		(1,448	)		(900	)		(63	)
Commercial business loans		(72	)		(795	)		(150	)		(10	)		(265	)
Consumer loans		(500	)		(609	)		(790	)		(468	)		(498	)
Total, net	$	(2,920	)	$	(2,186	)	$	(2,505	)	$	(1,378	)	$	(945	)
Net charge-offs (current quarter annualized)/average loans		0.59	%		0.45	%		0.51	%		0.27	%		0.19	%
Net charge-offs (YTD annualized)/average loans		0.52	%		0.48	%		0.51	%		0.19	%		0.16	%
DELINQUENT LOANS/TOTAL LOANS
30-89 Days delinquent		0.34	%		0.63	%		0.45	%		0.46	%		0.45	%
90+ Days delinquent and still accruing		0.08	%		0.03	%		0.01	%		0.05	%		0.03	%
Total accruing delinquent loans		0.42	%		0.66	%		0.46	%		0.51	%		0.48	%
Non-accruing loans		1.14	%		0.57	%		0.63	%		0.61	%		0.52	%
Total delinquent loans		1.56	%		1.23	%		1.09	%		1.12	%		1.00	%

F-5

BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS

	At or for the Quarters Ended
	Sept. 30,			June 30,			Mar. 31,			Dec. 31,			Sep. 30,
	2009			2009			2009			2008			2008
PERFORMANCE RATIOS
Core return on tangible assets		0.44	%		0.45	%		0.77	%		0.98	%		1.03	%
Return on total assets		0.29			0.35			0.59			0.79			0.82
Core return on tangible common equity		4.70			5.23			8.54			12.70			15.85
Return on total common equity		1.86			2.38			3.52			5.62			6.26
Net interest margin, fully taxable equivalent		2.96			2.91			3.11			3.41			3.48
Core tangible non-interest income to tangible assets		1.16			1.15			1.42			1.04			1.21
Non-interest income to assets		1.08			1.26			1.32			0.97			1.13
Core tangible non-interest expense to tangible assets		2.88			2.97			2.86			2.68			2.82
Non-interest expense to assets		2.82			2.99			2.80			2.62			2.76
Efficiency ratio		72.49			75.85			65.23			62.24			62.18
GROWTH
Total loans, year-to-date (annualized)		(1	)%		(4	)%		(8	)%		3	%		3	%
Total deposits, year-to-date (annualized)		10			13			24			—			1
Total net revenues, year-to-date, compared to prior year		(7	)		(6	)		(5	)		21			29
FINANCIAL DATA (In millions)
Total assets	$	2,681		$	2,681		$	2,724		$	2,667		$	2,566
Total loans		1,986			1,969			1,969			2,007			1,922
Total intangible assets		177			178			179			179			180
Total deposits		1,967			1,951			1,938			1,830			1,837
Total common stockholders’ equity		410			408			376			372			333
Total core income		1.9			2.0			3.9			5.2			5.3
Total net income		1.9			2.3			3.9			5.2			5.3
ASSET QUALITY RATIOS
Net charge-offs (current quarter annualized)/average loans		0.59	%		0.45	%		0.51	%		0.27	%		0.19	%
Non-performing assets/total assets		0.85			0.42			0.47			0.48			0.44
Allowance for loan losses/total loans		1.22			1.16			1.16			1.14			1.15
Allowance for loan losses/non-accruing loans		1.07	x		2.04	x		1.84	x		1.88	x		2.21	x
PER COMMON SHARE DATA
Core earnings, diluted	$	0.14		$	0.15		$	0.27		$	0.44		$	0.51
Net earnings, diluted		0.14			(0.08	)		0.27			0.44			0.51
Tangible common book value		16.76			16.52			16.02			15.73			14.58
Total common book value		29.46			29.29			30.54			30.33			31.71
Market price at period end		21.94			20.78			22.92			30.86			32.00
Dividends		0.16			0.16			0.16			0.16			0.16
CAPITAL RATIOS
Common stockholders’ equity to total assets		15.31	%		15.20	%		13.80	%		13.82	%		12.97	%
Tangible common stockholders’ equity to tangible assets		9.32			9.18			7.74			7.62			6.41

(1)	Reconciliations of Non-GAAP financial measures, including all references to core and tangible amounts, appear on pages F-9 and F-10. Tangible assets are total assets less total intangible assets.
(2)	All performance ratios are annualized and are based on average balance sheet amounts, where applicable.

F-6

BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
AVERAGE BALANCES

	Quarters Ended
	Sept. 30,		June 30,		Mar. 31,		Dec. 31,		Sept. 30,
(In thousands)	2009		2009		2009		2008		2008
Assets
Loans
Residential mortgages	$	621,632	$	637,232	$	675,905	$	679,000	$	672,363
Commercial mortgages		832,716		810,421		804,109		808,308		787,543
Commercial business loans		177,720		173,486		173,055		185,434		192,065
Consumer loans		329,177		338,506		343,296		343,894		346,068
Total loans		1,961,245		1,959,645		1,996,365		2,016,636		1,998,039
Securities		384,204		346,274		335,414		304,466		266,720
Federal funds sold and short-term investments		30,956		73,874		49,966		15,345		4,384
Total earning assets		2,376,405		2,379,793		2,381,745		2,336,447		2,269,143
Goodwill and other intangible assets		177,233		178,164		178,711		179,187		180,387
Other assets		115,223		125,446		113,471		105,097		105,937
Total assets	$	2,668,861	$	2,683,403	$	2,673,927	$	2,620,731	$	2,555,467
Liabilities and stockholders’ equity
Deposits
NOW	$	179,837	$	187,174	$	193,038	$	196,326	$	193,192
Money market		511,191		483,302		462,518		453,977		447,184
Savings		213,016		210,678		213,074		220,565		221,746
Time		781,732		795,155		762,940		746,913		734,195
Total interest-bearing deposits		1,685,776		1,676,309		1,631,570		1,617,781		1,596,317
Borrowings and debentures		287,812		310,323		365,833		382,015		380,453
Total interest-bearing liabilities		1,973,588		1,986,632		1,997,403		1,999,796		1,976,770
Non-interest-bearing demand deposits		261,592		251,565		232,480		229,175		232,762
Other liabilities		23,716		30,146		32,960		17,566		10,804
Total liabilities		2,258,896		2,268,343		2,262,843		2,246,537		2,220,336
Total stockholders’ common equity		409,965		392,321		374,207		368,991		335,131
Total stockholders’ preferred equity		—		22,739		36,877		5,203		—
Total stockholders’ equity		409,965		415,060		411,084		374,194		335,131
Total liabilities and stockholders’ equity	$	2,668,861	$	2,683,403	$	2,673,927	$	2,620,731	$	2,555,467
Supplementary data
Total non-maturity deposits	$	1,165,636	$	1,132,719	$	1,101,110	$	1,100,043	$	1,094,884
Total deposits		1,947,368		1,927,874		1,864,050		1,846,956		1,829,079
Fully taxable equivalent income adj.		555		562		566		532		532

(1) Average balances for securities available-for-sale are based on amortized cost. Total loans include non-accruing loans.

F-7

BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
AVERAGE YIELDS (Fully Taxable Equivalent — Annualized)

	Quarters Ended
	Sept. 30,			June 30,			Mar. 31,			Dec. 31,			Sept. 30,
	2009			2009			2009			2008			2008
Earning assets
Loans
Residential mortgages		5.38	%		5.46	%		5.56	%		5.64	%		5.65	%
Commercial mortgages		5.02			5.17			5.39			6.01			6.24
Commercial business loans		5.53			5.76			5.96			5.99			6.41
Consumer loans		4.33			4.46			4.64			5.46			5.86
Total loans		5.06			5.19			5.37			5.79			5.99
Securities		4.11			4.58			4.85			5.14			5.27
Federal funds sold and short-term investments		0.24			0.24			0.17			0.54			1.45
Total earning assets		4.84			4.94			5.18			5.67			5.89
Funding liabilities
Deposits
NOW		0.36			0.45			0.40			0.52			0.64
Money Market		1.25			1.42			1.40			1.73			1.86
Savings		0.31			0.34			0.44			0.68			0.61
Time		3.10			3.32			3.43			3.54			3.76
Total interest-bearing deposits		1.89			2.08			2.11			2.27			2.41
Borrowings and debentures		4.48			4.35			4.10			4.21			4.27
Total interest-bearing liabilities		2.27			2.43			2.47			2.64			2.77
Net interest spread		2.57			2.51			2.71			3.03			3.12
Net interest margin		2.96			2.91			3.11			3.41			3.48
Cost of funds		2.00			2.16			2.21			2.37			2.48
Cost of deposits		1.64			1.81			1.84			1.99			2.10

(1)	Average balances and yields for securities available-for-sale are based on amortized cost.
(2)	Cost of funds includes all deposits and borrowings.

F-8

BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

			At or for the Quarters Ended
			Sept. 30,			June 30,			Mar. 31,			Dec. 31,			Sept. 30,
(Dollars in thousands)			2009			2009			2009			2008			2008
Net income			$	1,922		$	2,331		$	3,883		$	5,206		$	5,276
Adj: Loss (gain) on sale of securities, net				5			(3	)		2			—			(4	)
Less: Merger termination fee				—			(970	)		—			—			—
Less: Other non-recurring income				(1	)		(270	)		63			—			—
Plus: Merger related expenses				—			215			—			—			—
Plus: Other non-recurring expense				—			386			—			—			—
Adj: Income taxes				(2	)		269			(27	)		—			2
Total core income	(A	)	$	1,924		$	1,958		$	3,921		$	5,206		$	5,274
Plus: Amortization of intangible assets				833			833			833			838			889
Total tangible core income	(B	)	$	2,757		$	2,791		$	4,754		$	6,044		$	6,163
Total non-interest income			$	7,260		$	8,405		$	8,672		$	6,377		$	7,235
Adj: Loss (gain) on sale of securities, net				5			(3	)		2			—			(4	)
Less: Non-recurring income				(1	)		(1,240	)		63			—			—
Total core non-interest income	(C	)		7,264			7,162			8,737			6,377			7,231
Net interest income				17,165			16,724			17,711			19,470			19,329
Total core revenue	(D	)	$	24,429		$	23,886		$	26,448		$	25,847		$	26,560
Total non-interest expense			$	18,944		$	19,978		$	18,453		$	17,256		$	17,737
Less: Non-recurring expense				—			(601	)		—			—			—
Core non-interest expense	(E	)		18,944			19,377			18,453			17,256			17,737
Less: Amortization of intangible assets				(833	)		(833	)		(833	)		(838	)		(889	)
Total core tangible non-interest expense	(F	)	$	18,111		$	18,544		$	17,620		$	16,418		$	16,848
(Dollars in millions, except per share data)
Total average assets			$	2,669		$	2,683		$	2,674		$	2,621		$	2,555
Less: Average intangible assets				(177	)		(178	)		(179	)		(179	)		(180	)
Total average tangible assets	(G	)	$	2,492		$	2,505		$	2,495		$	2,442		$	2,375
Total average stockholders’ equity			$	410		$	415		$	411		$	374		$	335
Less: Average intangible assets				(177	)		(178	)		(179	)		(179	)		(180	)
Total average tangible stockholders’ equity				233			237			232			195			155
Less: Average preferred equity				—			(23	)		(37	)		(6	)		—
Total average tangible common stockholders’ equity	(H	)	$	233		$	214		$	195		$	189		$	155
Total stockholders’ equity, period-end			$	410		$	408		$	413		$	408		$	335
Less: Intangible assets, period-end				(177	)		(178	)		(179	)		(179	)		(180	)
Total tangible stockholders’ equity, period-end				233			230			234			229			155
Less: Preferred equity, period-end				—			—			(37	)		(37	)		—
Total tangible common stockholders’ equity, period-end	(I	)	$	233		$	230		$	197		$	192		$	155
Total common shares outstanding, period-end (thousands)	(J	)		13,928			13,916			12,306			12,253			10,493
Average diluted common shares outstanding (thousands)	(K	)		13,857			12,946			12,247			11,892			10,400
Core earnings per common share, diluted (1)	(A/K	)	$	0.14		$	0.15		$	0.27		$	0.44		$	0.51
Tangible book value per common share, period-end	(I/J	)	$	16.76		$	16.52		$	16.02		$	15.73		$	14.58
Core return on tangible assets	(B/G	)		0.44	%		0.45	%		0.77	%		0.98	%		1.03	%
Core return on tangible common equity (1)	(B/H	)		4.70			5.23			8.54			12.70			15.85
Core tangible non-interest income to tangible assets	(C/G	)		1.16			1.15			1.42			1.04			1.21
Core tangible non-interest expense to tangible assets	(F/G	)		2.88			2.97			2.86			2.68			2.82
Efficiency ratio (2)				72.49			75.85			65.23			62.24			62.18

(1)	March 31, 2009 EPS and ratios include a $637,000 reduction in core income and tangible core income related to cumulative preferred stock dividend and accretion. Preferred dividend charges recorded in Q2 were deemed non-core due to preferred stock repayment.
(2)	Efficiency ratio is computed by dividing total tangible core non-interest expense by the sum of total net interest income on a fully taxable equivalent basis and total core non-interest income. The Company uses this non-GAAP measure, which is used widely in the banking industry, to provide important information regarding its operational efficiency.
(3)	Ratios are annualized and based on average balance sheet amounts, where applicable.
(4)	Quarterly data may not sum to year-to-date data due to rounding.

F-9

BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

			At or for the Nine Months Ended
			September 30,			September 30,
(Dollars in thousands)			2009			2008
Net income			$	8,136		$	17,038
Adj: Loss (gain) on sale of securities, net				4			22
Less: Merger termination fee				(970	)		—
Less: Other non-recurring income				(208	)		—
Plus: Merger related expenses				215			—
Plus: Other non-recurring expense				386			683
Adj: Income taxes				240			(699	)
Total core income	(A	)	$	7,803		$	17,044
Plus: Amortization of intangible assets				2,499			2,992
Total tangible core income	(B	)	$	10,302		$	20,036
Total non-interest income			$	24,337		$	25,218
Adj: Loss (gain) on sale of securities, net				4			22
Less: Non-recurring income				(1,178	)		—
Total core non-interest income	(C	)		23,163			25,240
Net interest income				51,600			56,270
Total core revenue	(D	)	$	74,763		$	81,510
Total non-interest expense			$	57,375		$	54,443
Less: Non-recurring expense				(601	)		(683	)
Core non-interest expense	(E	)		56,774			53,760
Less: Amortization of intangible assets				(2,499	)		(2,992	)
Total core tangible non-interest expense	(F	)	$	54,275		$	50,768
(Dollars in millions, except per share data)
Total average assets			$	2,675		$	2,528
Less: Average intangible assets				(178	)		(181	)
Total average tangible assets	(G	)	$	2,497		$	2,347
Total average stockholders’ equity			$	412		$	331
Less: Average intangible assets				(178	)		(182	)
Total average tangible stockholders’ equity				234			149
Less: Average preferred equity				(20	)		—
Total average tangible common stockholders’ equity	(H	)	$	214		$	149
Total stockholders’ equity, period-end			$	410		$	335
Less: Intangible assets, period-end				(177	)		(180	)
Total tangible stockholders’ equity, period-end				233			155
Less: Preferred equity, period-end				—			—
Total tangible common stockholders’ equity, period-end	(I	)	$	233		$	155
Total common shares outstanding, period-end (thousands)	(J	)		13,928			10,493
Average diluted common shares outstanding (thousands)	(K	)		13,145			10,421
Core earnings per common share, diluted (1)	(A/K	)	$	0.55		$	1.64
Tangible book value per common share, period-end	(I/J	)	$	16.73		$	14.58
Core return on tangible assets	(B/G	)		0.55	%		1.14	%
Core return on tangible common equity (1)	(B/H	)		6.14			17.61
Core tangible non-interest income to tangible assets	(C/G	)		1.24			1.44
Core tangible non-interest expense to tangible assets	(F/G	)		2.91			2.89
Efficiency ratio (2)				71.00			61.12

(1)	September 30, 2009 EPS and ratios include a $637,000 reduction in core income and tangible core income for cumulative preferred stock dividend and accretion accumulated during Q1 2009. Preferred dividend charges recorded in Q2 were deemed non-core due to preferred stock repayment.
(2)	Efficiency ratio is computed by dividing total tangible core non-interest expense by the sum of total net interest income on a fully interest income on a fully taxable equivalent basis and total core non-interest income. The Company uses this non-GAAP measure, which is used widely in the banking industry, to provide important information regarding its operational efficiency.
(3)	Ratios are annualized and based on average balance sheet amounts, where applicable.
(4)	Quarterly data may not sum to year-to-date data due to rounding

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