OPERATING SEGMENTS

3 Months Ended

Mar. 31, 2013

OPERATING SEGMENTS

OPERATING SEGMENTS

NOTE 11. 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 BIG 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 was as follows:

(In thousands)	Banking			Insurance		Parent			Eliminations			Total Consolidated
Three months ended March 31, 2013
Net interest income (expense)	$	42,901		$	—	$	6,036		$	(7,000	)	$	41,937
Provision for loan losses	2,400			—		—			—			2,400
Non-interest income	11,818			2,980		4,463			(4,463		)	14,798
Non-interest expense	36,687			2,134		662			—			39,483
Income (loss) before income taxes	15,632			846		9,837			(11,463		)	14,852
Income tax expense (benefit)	4,705			310		(628		)	—			4,387
Net income	$	10,927		$	536	$	10,465		$	(11,463	)	$	10,465
Average assets (in millions)	$	5,203		$	27	$	755		$	(745	)	$	5,240
Three months ended March 31, 2012
Net interest income (expense)	$	31,352		$	—	$	(207	)	$	—		$	31,145
Provision for loan losses	2,000			—		—			—			2,000
Non-interest income	7,056			2,746		6,284			(6,284		)	9,802
Non-interest expense	27,617			2,214		363			—			30,194
Income (loss) before income taxes	8,791			532		5,714			(6,284		)	8,753
Income tax expense (benefit)	2,188			214		(130		)	—			2,272
Net income from continuing operations	6,603			318		5,844			(6,284		)	6,481
Income from discontinued operations before income taxes (including gain on disposal of $63)	(261		)	—		—			—			(261		)
Income tax expense	376			—		—			—			376
Net loss from discontinued operations	(637		)	—		—			—			(637		)
Net income	$	5,966		$	318	$	5,844		$	(6,284	)	$	5,844
Average assets (in millions)	$	3,954		$	30	$	494		$	(481	)	$	3,997