STOCKHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2013

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

NOTE 8.               STOCKHOLDERS’ EQUITY

The Bank’s actual and required capital ratios were as follows:

					FDIC Minimum
	March 31, 2013		December 31, 2012		to be Well Capitalized
Total capital to risk weighted assets	12.2	%	11.8	%	10.0	%
Tier 1 capital to risk weighted assets	10.4		10.0		6.0
Tier 1 capital to average assets	8.2		7.5		5.0

At each date shown, Berkshire Bank met the conditions to be classified as “well capitalized” under the regulatory framework for prompt corrective action.  To be categorized as well capitalized, an institution must maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table above.

Accumulated other comprehensive income

Components of accumulated other comprehensive loss are as follows:

(In thousands)	March 31, 2013			Decemeber 31, 2012
Other accumulated comprehensive income/(loss), before tax:
Net unrealized holding gain on AFS securities	$	11,451		$	10,719
Net loss on effective cash flow hedging derivatives	(9,512		)	(10,955		)
Net loss on terminated swap	(3,944		)	(4,179		)
Net unrealized holding loss on pension plans	(1,265		)	(1,265		)
Income taxes related to items of accumulated other comprehensive (loss)/income:
Net unrealized holding loss on AFS securities	(4,327		)	(4,007		)
Net loss on effective cash flow hedging derivatives	3,822			4,397
Net loss on terminated swap	1,594			1,801
Net unrealized holding gain on pension plans	510			510
Accumulated other comprehensive loss	$	(1,671	)	$	(2,979	)

The following table presents the components of other comprehensive loss for the three months ended March 31, 2013 and 2012:

(In thousands)	Before Tax			Tax Effect			Net of Tax
Three Months Ended March 31, 2013
Net unrealized holding gain on AFS securities:
Net unrealized gain arising during the period	$	732		$	(320	)	$	412
Less: reclassification adjustment for gains realized in net income	—			—			—
Net unrealized holding gain on AFS securities	732			(320		)	412
Net loss on effective cash flow hedging derivatives:
Net unrealized loss arising during the period	305			(116		)	189
Less: reclassification adjustment for losses realized in net income	1,138			(459		)	679
Net loss on effective cash flow hedging derivatives	1,443			(575		)	868
Net loss on terminated swap:
Net unrealized loss arising during the period	—			—			—
Less: reclassification adjustment for losses realized in net income	236			(208		)	28
Net loss on terminated swap	236			(208		)	28
Other Comprehensive Income	$	2,411		$	(1,103	)	$	1,308
Three Months Ended March 31, 2012
Net unrealized holding gain on AFS securities:
Net unrealized gain arising during the period	$	1,333		$	(531	)	$	802
Less: reclassification adjustment for losses realized in net income	(41		)	17			(24		)
Net unrealized holding gain (loss) on AFS securities	1,292			(514		)	778
Net loss on effective cash flow hedging derivatives:
Net unrealized gain arising during the period	(697		)	188			(509		)
Less: reclassification adjustment for losses realized in net income	982			(395		)	587
Net loss on effective cash flow hedging derivatives	285			(207		)	78
Net loss on terminated swap:
Net unrealized loss arising during the period	—			—			—
Less: reclassification adjustment for losses realized in net income	235			(98		)	137
Net loss on terminated swap	235			(98		)	137
Other Comprehensive Income	$	1,812		$	(819	)	$	993

The following table presents the changes in each component of accumulated other comprehensive income, for the three months ended March 31, 2013:

	Net unrealized		Net loss on			Net loss			Net unrealized
	holding gain		effective cash			on			holding loss
	on AFS		flow hedging			terminated			on
(in thousands)	Securities		derivatives			swap			pension plans			Total
Balance, Decmber 31, 2012	$	10,719	$	(10,955	)	$	(4,179	)	$	(1,265	)	$	(5,680	)
Other Comprehensive Loss Before reclassifications	732		305			—			—			1,037
Amounts Reclassified from Accumulated other comprehensive income	—		1,138			236			—			1,374
Other Comprehensive Income	732		1,443			236			—			2,411
Balance, March 31, 2013	$	11,451	$	(9,512	)	$	(3,943	)	$	(1,265	)	$	(3,269	)

The following table presents the amounts reclassified out of each component of accumulated other comprehensive income for the three months ended March 31, 2013:

	Amount
	Reclassified
	From
	Accumulated
	Other			Affected Line Item in the
	Comprehensive			Statement Where Net Income
(in thousands)	Income			Is Presented
Realized losses on effective cash flow hedging derivatives
	1,138			Borrowings and junior subordinated notes
	(459		)	Tax expense
	679			Net of tax
Amortization of realized losses on terminated swap
	236			Borrowings and junior subordinated notes
	(208		)	Tax expense
	28			Net of tax
Total reclassifications for the period	$	707		Net of tax