NOTE 12.BORROWED FUNDS

Borrowed funds at December 31, 2014 and 2013 are summarized, as follows:

	2014				2013
			Weighted				Weighted
			Average				Average
(in thousands, except rates)	Principal		Rate		Principal		Rate
Short-term borrowings:
Advances from the FHLBB	$	890,900	0.24	%	$	862,510	0.22	%
Other Borrowings	10,000		1.80		10,000		1.92
Total short-term borrowings:	900,900		0.23		872,510		0.24
Long-term borrowings:
Advances from the FHLBB	61,676		0.93		101,918		1.23
Subordinated notes	74,283		7.00		74,215		7.00
Junior subordinated notes	15,464		2.08		15,464		2.09
Total long-term borrowings:	151,423		4.03		191,597		3.53
Total	$	1,052,323	0.79	%	$	1,064,107	0.83	%

Short-term debt includes Federal Home Loan Bank of Boston (“FHLBB”) advances with an original maturity of less than one year and a short-term line-of-credit drawdown through a correspondent bank. The Bank also maintains a $3.0 million secured line of credit with the FHLBB that bears a daily adjustable rate calculated by the FHLBB. There was no outstanding balance on the FHLBB line of credit for the period ended December 31, 2014 and December 31, 2013. The Company is in compliance with all debt covenants as of December 31, 2014.

The Bank is approved to borrow on a short-term basis from the Federal Reserve Bank of Boston as a non-member bank. The Bank has pledged certain loans and securities to the Federal Reserve Bank to support this arrangement. No borrowings with the Federal Reserve Bank of Boston took place for the period ended December 31, 2014 and December 31, 2013.

Long-term FHLBB advances consist of advances with an original maturity of more than one year. The advances outstanding at December 31, 2014 include callable advances totaling $5.0 million, and amortizing advances totaling $5.1 million. The advances outstanding at December 31, 2013 include callable advances totaling $5.0 million, and amortizing advances totaling $5.5 million. All FHLBB borrowings, including the line of credit, are secured by a blanket security agreement on certain qualified collateral, principally all residential first mortgage loans and certain securities.

A summary of maturities of FHLBB advances at year-end 2014 and 2013 is as follows:

	2014				2013
			Weighted				Weighted
(In thousands)	Amount		Average Rate		Amount		Average Rate

Fixed rate advances maturing:
2015	$	940,900	0.24	%	$	882,525	0.28	%
2016	1,519		0.88		—		—
2017	5,000		4.33		1,583		0.79
2018	—		0.00		5,000		4.33
2019 and beyond	5,157		3.85		5,320		3.83
Total fixed rate advances	952,576		0.28		894,428		0.35

Variable rate advances maturing:
2015	—		0.00		10,000		0.32
2016	—		0.00		20,000		0.30
2017	—		0.00		10,000		0.30
2018	—		0.00		—		0.00
2019 and beyond	—		0.00		30,000		0.30
Total variable rate advances	—		0.00		70,000		0.30

Total FHLBB advances	$	952,576	0.28	%	$	964,428	0.32	%

In September 2012, the Company issued fifteen year subordinated notes in the amount of $75.0 million at a discount of 1.15%. The interest rate is fixed at 6.875% for the first ten years. After ten years, the notes become callable and convert to an interest rate of three month LIBOR plus 5.113%.

The Company holds 100% of the common stock of Berkshire Hills Capital Trust I (“Trust I”) which is included in other assets with a cost of $0.5 million. The sole asset of Trust I is $15.5 million of the Company’s junior subordinated debentures due in 2035. These debentures bear interest at a variable rate equal to LIBOR plus 1.85% and had a rate of 2.08% and 2.09% at December 31, 2014 and December 31, 2013, respectively. The Company has the right to defer payments of interest for up to five years on the debentures at any time, or from time to time, with certain limitations, including a restriction on the payment of dividends to stockholders while such interest payments on the debentures have been deferred. The Company has not exercised this right to defer payments. The Company has the right to redeem the debentures at par value. Trust I is considered a variable interest entity for which the Company is not the primary beneficiary. Accordingly, Trust I is not consolidated into the Company’s financial statements.