OPERATING SEGMENTS

12 Months Ended

Dec. 31, 2012

OPERATING SEGMENTS

OPERATING SEGMENTS

21.          OPERATING SEGMENTS

The Company has two reportable operating segments, Banking and Insurance, which are delineated by the consolidated subsidiaries of Berkshire Hills Bancorp, Inc.  Banking includes the activities of the Bank and its subsidiaries, which provide retail and commercial banking, along with wealth management and investment services.  Insurance includes the activities of BIG, which provides retail and commercial insurance services.  The only other consolidated financial activity of the Company is the Parent, which consists of the transactions of Berkshire Hills Bancorp, Inc. Management fees for corporate services provided by the Bank to Berkshire Insurance Group and the Parent are eliminated.

The accounting policies of each reportable segment are the same as those of the Company.  The Insurance segment and the Parent reimburse the Bank for administrative services provided to them.  Income tax expense for the individual segments is calculated based on the activity of the segments, and the Parent records the tax expense or benefit necessary to reconcile to the consolidated total.  The Parent does not allocate capital costs.  Average assets include securities available-for-sale based on amortized cost.

A summary of the Company’s operating segments is as follows:

												Total
(In thousands)	Banking			Insurance		Parent			Eliminations			Consolidated
Year ended December 31, 2012
Net interest income	$	145,167		$	—	$	15,221		$	(17,000	)	$	143,388
Provision for loan losses	9,590			—		—			—			9,590
Non-interest income	43,330			10,726		19,678			(19,678		)	54,056
Non-interest expense	128,366			8,452		3,988			—			140,806
Income before income taxes	50,541			2,274		30,911			(36,678		)	47,048
Income tax expense (benefit)	14,597			903		(2,277		)	—			13,223
Net income from continuing operations	35,944			1,371		33,188			(36,678		)	33,825
Income from discontinued operations before income taxes (including gain on disposal of $63)	(261		)	—		—			—			(261		)
Income tax expense	376			—		—			—			376
Net income from discontinued operations	(637		)	—		—			—			(637		)
Net income	$	35,307		$	1,371	$	33,188		$	(36,678	)	$	33,188
Average assets (in millions)	$	5,006		$	30	$	559		$	(392	)	$	5,203

(In thousands)	Banking		Insurance		Parent			Eliminations			Consolidated
Year ended December 31, 2011
Net interest income	$	107,348	$	—	$	3,372		$	(4,200	)	$	106,520
Provision for loan losses	7,563		—		—			—			7,563
Non-interest income	24,716		11,087		16,067			(16,067		)	35,803
Non-interest expense	103,571		8,752		4,119			—			116,442
Income before income taxes	20,930		2,335		15,320			(20,267		)	18,318
Income tax expense (benefit)	2,932		980		(2,028		)	—			1,884
Net income from continuing operations	17,998		1,355		17,348			(20,267		)	16,434
Income from discontinued operations before income taxes (including gain on disposal of $4,962)	4,684		—		—			—			4,684
Income tax expense	3,770		—		—			—			3,770
Net income from discontinued operations	914		—		—			—			914
Net income	$	18,912	$	1,355	$	17,348		$	(20,267	)	$	17,348
					—
Average assets (in millions)	$	3,447	$	32	$	435		$	(433	)	$	3,481

(In thousands)	Banking		Insurance		Parent			Eliminations			Total Consolidated
Year ended December 31, 2010
Net interest income	$	77,802	$	—	$	(855	)	$	—		$	76,947
Provision for loan losses	8,526		—		—			—			8,526
Non-interest income	18,560		11,193		14,966			(14,968		)	29,751
Non-interest expense	71,327		9,385		1,426			(1		)	82,137
Income before income taxes	16,509		1,808		12,685			(14,967		)	16,035
Income tax expense (benefit)	2,608		743		(930		)	(1		)	2,420
Net income	$	13,901	$	1,065	$	13,615		$	(14,966	)	$	13,615
Average assets (in millions)	$	2,704	$	32	$	361		$	(359	)	$	2,738