OPERATING SEGMENTS

3 Months Ended

Mar. 31, 2015

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 Berkshire Insurance Group, Inc. (“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, 2015
Net interest income	$	46,339		$	—	$	5,154		$	(6,000	)	$	45,493
Provision for loan losses	3,851			—		—			—			3,851
Non-interest income	9,413			2,967		3,785			(3,603		)	12,562
Non-interest expense	42,494			1,939		715			—			45,148
Income before income taxes	9,407			1,028		8,224			(9,603		)	9,056
Income tax expense (benefit)	433			399		(535		)	—			297
Net income	$	8,974		$	629	$	8,759		$	(9,603	)	$	8,759
Average assets (in millions)	$	6,479		$	28	$	757		$	(767	)	$	6,497
Three months ended March 31, 2014
Net interest income (expense)	$	43,712		$	—	$	(946	)	$	—		$	42,766
Provision for loan losses	3,396			—		—			—			3,396
Non-interest income	1,374			3,049		(252		)	252			4,423
Non-interest expense	42,574			2,322		464			—			45,360
Income before income taxes	(884		)	727		(1,662		)	252			(1,567		)
Income tax expense (benefit)	(192		)	287		(556		)	—			(461		)
Net income	$	(692	)	$	440	$	(1,106	)	$	252		$	(1,106	)
Average assets (in millions)	$	5,829		$	26	$	722		$	(726	)	$	5,851