ACQUISITIONS (Tables)

9 Months Ended

Sep. 30, 2012

ACQUISITIONS

Schedule of unaudited pro forma information

	Pro Forma
	Nine months ended September 30,
	2012		2011
Net interest income	$	105,183	$	84,869
Non-interest income	45,205		40,919
Net income	24,443		9,292
Pro forma earnings per share from continuing operations:
Basic	$	1.16	$	0.52
Diluted	$	1.16	$	0.52

CBT

ACQUISITIONS

Summary of consideration paid, and fair values of entity's assets acquired and liabilities assumed

Consideration Paid:
Berkshire Hills Bancorp common stock issued to CBT common stockholders	$	21,992
Cash consideration paid to CBT common shareholders	8,952
Repurchase of CBT’s preferred stock and warrant	6,290
Cash consideration paid for CBT employee stock options	150
Total consideration paid	$	37,384

Recognized Amounts of Identifiable Assets Aquired and (Liabilities Assumed), At Fair Value:	As Acquired			Fair Value Adjustments			As Recorded at Acquisition
Cash and short term investments	$	10,567		$	—		$	10,567
Investment securities	41,428			(46)		(a)	41,382
Loans	215,773			(6,181)		(b)	209,592
Premises and equipment	1,393			—			1,393
Core deposit intangibles	—			1,000		(c)	1,000
Other intangibles	—			(238)		(d)	(238		)
Other assets	3,081			7,668		(e)	10,749
Deposits	(209,707		)	(428)		(f)	(210,135		)
Borrowings	(35,865		)	(3,020)		(g)	(38,885		)
Other liabilities	(1,978		)	(209)		(h)	(2,187		)
Total identifiable net assets	$	24,692		$	(1,454	)	$	23,238
Goodwill							$	14,146

Explanation of Certain Fair Value Adjustments

(a)The adjustment represents the write down of the book value of investments to their estimated fair value based on fair values on the date of acquisition.

(b)The adjustment represents the write down of the book value of loans to their estimated fair value based on current interest rates and expected cash flows, which includes an estimate of expected loan loss inherent in the portfolio.  Loans that met the criteria and are being accounted for in accordance with ASC 310-30 had a carrying amount of $23.8 million.  Non-impaired loans not accounted for under 310-30 had a carrying value of $192.0 million.

(c)The adjustment represents the value of the core deposit base assumed in the acquisition.  The core deposit asset was recorded as an identifiable intangible asset and will be amortized over the average life of the deposit base.

(d)Represents an intangible liability related to assumed leases, which was recorded as an identifiable intangible and will be amortized over the remaining life of the leases.

(e)This amount primarily consists of adjustments in the net deferred tax assets resulting from the fair value adjustments related to the acquired assets and liabilities, identifiable intangibles, and other deferred tax items including recognition of a $4.8 million deferred tax asset related to operating losses, which CBT had a full valuation allowance against.

(f)The adjustment is necessary because the weighted average interest rate of deposits exceeded the cost of similar funding at the time of acquisition.

(g)Adjusts borrowings to their estimated fair value calculated based on interest rates of similar borrowings available on the date of acquisition.

(h)Adjusts the book value of other liabilities to their estimated fair value at the acquisition date.

Schedule of acquired loan portfolio

	ASC 310-30 Loans
Contractually required principal and interest at acquisition	$	23,726
Contractual cash flows not expected to be collected (nonaccretable discount)	(5,563		)
Expected cash flows at acquisition	18,163
Interest component of expected cash flows (accretable discount)	(2,816		)
Fair value of acquired loans	$	15,347

Greenpark

ACQUISITIONS

Summary of consideration paid, and fair values of entity's assets acquired and liabilities assumed

Consideration Paid:
Cash purchase price	$	4,000
Cash paid for certain prepaid assets	58
Payoff of Greenpark’s lines of credit	46,496
Premiums paid for loans, and loan commitments	2,770
Contingent purchase price	1,087
Total consideration paid	54,411
Recognized Amounts of Identifiable Assets Aquired and (Liabilities Assumed), At Fair Value:
Loans held for sale	48,408		(a)
Other assets	2,621		(b)
Premises and equipment	98		(c)
Other liabilities	(862		)(d)
Total identifiable net assets	50,265
Goodwill	$	4,146

Explanation of Certain Fair Values

(a)Includes a portion of the cash consideration paid for premiums as described above, which adjusts the loans to fair value.

(b)Represents the fair value of the acquired derivative associated with commitments to originate loans at a specified locked-rate (“interest rate lock commitments”).

(c)Represents the fair value of certain acquired office equipment.

(d)Consists of forward contracts acquired at fair value, which serves to hedge the movements in fair value of the interest rate lock commitments.