MERGERS & ACQUISITIONS (Tables)

12 Months Ended

Dec. 31, 2012

ACQUISITIONS

Schedule of unaudited pro forma supplemental information from the combined results of operations

	Pro Forma (unaudited)
	Twelve months ended December 31,
	2012		2011
Net interest income	$	157,343	$	146,682
Non-interest income	67,437		64,170
Net income from continuing operations	33,442		21,251
Pro forma earnings per share from continuing operations:
Basic	$	1.36	$	0.99
Diluted	$	1.35	$	0.98

Beacon Federal

ACQUISITIONS

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

Consideration Paid: (In thousands)	Amount
Berkshire Hills Bancorp common stock issued to BFED common stockholders	$	62,273
Cash consideration paid to BFED common shareholders	60,183
Fair value of BFED stock options converted to Berkshire options	5,732
Fair value of BFED shares previously purchased by Berkshire	5,194
Total consideration paid	$	133,382

Recognized amounts of identifiable assets acquired and (liabilities assumed), at fair value:	As Acquired			Fair Value Adjustment			As Recorded at Acquisition
Cash and short term investments	$	7,005		$	—		$	7,005
Investment securities	81,428			(1,346		)(a)	80,082
Loans	697,797			(32,060		)(b)	665,737
Premises and equipment	11,897			2,855		(c)	14,752
Core deposit intangibles	—			1,840		(d)	1,840
Other intangibles	—			324		(e)	324
Deferred tax assets, net	6,481			12,596		(f)	19,077
Other assets	27,391			(841		)(g)	26,550
Deposits	(622,246		)	(1,482		)(h)	(623,728		)
Borrowings	(78,000		)	(10		)(i)	(78,010		)
Other liabilities	(12,661		)	(2,097		)(j)	(14,758		)
Total identifiable net assets	$	119,092		$	(20,221	)	$	98,871
Goodwill							$	34,511

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 $78.3 million.  Non-impaired loans not accounted for under 310-30 had a carrying value of $619.5 million.

(c)  The amount represents the adjustment of the book value of buildings, and furniture and equipment, to their estimated fair value based on appraisals and other methods.  The adjustment includes a $2.4 million fair value write-up of a building under a capital lease arrangement.  The adjustments will be depreciated over the estimated economic lives of the assets.

(d)  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.

(e)  Represents identified intangibles related to assumed leases and acquired wealth management and insurance customer lists, which will be amortized over the remaining useful lives.

(f)   Represents net deferred tax assets resulting from the fair value adjustments related to the acquired assets and liabilities, identifiable intangibles, and other purchase accounting adjustments.

(g) The amount primarily consists of a $0.5 million fair value adjustment to write-down other real estate owned, and a $0.4 million write-down of mortgage servicing assets acquired, which were based on appraisals, and valuation reports, respectively. These adjustments are not accretable into earnings in the statement of income.

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

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

(j)  Adjusts the book value of other liabilities to their estimated fair value at the acquisition date.  The adjustment primarily consists of a $4.1 million increase to an acquired capital lease obligation, and a $2.3 write-off of deferred revenue.

Schedule of acquired loan portfolio

(In thousands)	ASC 310-30 Loans
Contractually required principal and interest at acquisition	$	78,325
Contractual cash flows not expected to be collected (nonaccretable discount)	(25,853		)
Expected cash flows at acquisition	52,472
Interest component of expected cash flows (accretable discount)	(8,998		)
Fair value of acquired loans	$	43,474

CBT

ACQUISITIONS

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

Consideration Paid: (In thousands)	Amount
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 warrant	6,290
Cash consideration paid for CBT employee stock options	150
Total consideration paid	$	37,384

Recognized amounts of identifiable assets acquired and (liabilities assumed), at fair value:	As Acquired			Fair Value Adjustment			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 $23.7 million.  Non-impaired loans not accounted for under 310-30 had a carrying value of $192.1 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

Information about the acquired loan portfolio subject to purchased credit impaired accounting guidance (ASC 310-30) as of April 20, 2012 is, as follows (in thousands):

(In thousands)	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: (In thousands)	Amount
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 acquired and (liabilities assumed), at fair value:	Amount
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	$	4,145

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.