BASIS OF PRESENTATION (Policies)

9 Months Ended

Sep. 30, 2012

BASIS OF PRESENTATION

Basis of presentation

BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and contain all adjustments, consisting solely of normal, recurring adjustments, necessary for a fair presentation of results for such periods.

In addition, these interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X, and accordingly, certain information and footnote disclosures normally included in financial statements prepared according to U.S. GAAP have been omitted.

The results for any interim period are not necessarily indicative of results for the full year. These consolidated financial statements should be read in conjunction with the audited financial statements and note disclosures for Berkshire Bancorp, Inc. (“the Company”) previously filed with the Securities and Exchange Commission in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

During the second quarter of 2012, and in connection with the Company’s purchase of the assets and business operations of Greenpark Mortgage Corporation (“Greenpark”) as described in Note 3, the Company adopted the applicable accounting guidance for the fair value option as it relates to held for sale loans (“HFS”).  This election allows for a more effective matching of the fair value changes that flow through earnings from the interest rate lock commitment (“IRLC”) stage to the funded HFS loan stage, and forward commitments used to economically hedge the changes in fair value of the IRLC and HFS loans.  The change was applied on a prospective basis starting with all HFS loans originated after April 30, 2012.  See Note 13 for the HFS loans fair value recorded in the Company’s Consolidated Balance Sheet and unrealized gain recorded in the Company’s Consolidated Statement of Income as of and for the period ended September 30, 2012.  The Company’s results of operations during 2011 would not have been significantly impacted had the Company applied the fair value option to its HFS loans during that year.

Out of Period Adjustment

Out of Period Adjustments

During the three months ended March 31, 2012 and June 30, 2012, the Company recorded corrections of immaterial errors that increased net income by $0.2 million and $0.5 million, respectively. The amounts represent corrections to tax-related over-accruals that occurred in prior years.  After evaluating the quantitative and qualitative aspects of these adjustments, the Company concluded that its prior year financial statements were not materially misstated and, therefore, no restatement was required.