Berkshire Bank parent reports 20 percent increase in Q4 core EPS, dividend increased

Submitted by tim on Mon, 01/26/2015 - 11:59

Berkshire Hills Bancorp, Inc(NYSE: BHLB), the parent company of Berkshire Bankreported a 20 percent increase in fourth quarter core earnings per share to$0.48in 2014 compared to$0.40in 2013.Earnings growth was driven by a 17 percent increase in core revenue as the company expanded operations in its footprint.Fourth quarter GAAP EPS increased by 10 percent to$0.46as earnings in both years were impacted by non-core charges related primarily to growth and restructuring.Berkshire Bank has branches in southwestern Vermont.

For the year, core earnings per share totaled$1.80in 2014.Core earnings decreased by 4 percent from$1.87per share in 2013 as volume growth was offset by lower margins in the first half of the year.GAAP EPS totaled$1.36in 2014 and$1.65in 2013.

FOURTH QUARTER FINANCIAL HIGHLIGHTS(comparisons are to prior quarter unless otherwise stated):

4% increase in core earnings per share
8% annualized increase in net revenue
17% year over year increase in fee income, with growth in all major categories
11% annualized increase in total loans
8% annualized increase in deposits
12% annualized increase in demand deposits
0.37% non-performing assets/assets
0.29% net loan charge-offs/average loans

CEOMichael Dalystated, "We finished the year on pace, with growth of2 centsper share in core earnings in each of the last four quarters. We delivered on the market share opportunities of our expanded footprint. Momentum continued in the fourth quarter, with strong growth in revenue, loans, and deposits compared to the linked quarter."

Mr. Daly continued, "We are well-positioned for further expansion in our footprint. During the fourth quarter, Hampden Bancorp entered a merger agreement with us, which will deepen our presence in theSpringfieldmarket and theHartford/Springfieldeconomic area. This merger is targeted for completion in the second quarter of 2015. Our Westborough branch opened in October, completing the build out of this regional office serving theWorcesterarea and ourCentral Massachusettsmarket. Our teams are building business volumes inEastern Massachusettsand inNew York, where earlier in the year we acquired 20 branches serving our Central andEastern New Yorkmarkets."

Mr. Daly concluded, "Our core return on assets improved during the year as we leveraged our franchise investment. In the fourth quarter, our active balance sheet management produced an increase in our net interest margin, while our close focus on expense control improved our efficiency ratio.We are targeting to extend these gains as we integrate our in-market merger with Hampden in 2015, and our teams across our franchise are delivering the right solutions for our markets and our investors. In recognition of our progress and prospects, I'm pleased to also be announcing a 6% increase in our quarterly dividend to shareholders."

DIVIDEND INCREASED

The Board of Directors voted to declare a cash dividend of$0.19per share to shareholders of record at the close of business onFebruary 12, 2015, payable onFebruary 26, 2015. This is a penny increase from$0.18and the new dividend equates to a 3.0% annualized yield based on the$25.05average closing price ofBerkshire'scommon stock during the fourth quarter.

ANNUAL MEETING DATE SET

The Board of Directors voted that the Annual Meeting of Shareholders shall be held onMay 7, 2015at the Crowne Plaza Hotel,One West Street,Pittsfield, Massachusettsat10:00 a.m.The date ofMarch 12, 2015was established as the record date for the determination of the shareholders entitled to notice of, and to vote at, the Annual Meeting.

FINANCIAL CONDITION

Fourth quarter results demonstrated strong loan growth funded by solid deposit growth and supported by capital generation that also strengthened the capital foundation. Loan growth was 11% annualized in the fourth quarter and 12% for the year 2014. Organic deposit growth was 8% annualized in the fourth quarter. Including the deposits from acquired branches, total deposits increased by 21% for the year. As a result, the ratio of loans/deposits decreased during the year, measuring 101% at year-end. The ratio of tangible equity to assets measured 7.0% at year-end, with total equity/assets measuring 10.9%. Most capital ratios are targeted to increase with the acquisition of Hampden Bancorp. Tangible book value per share increased by 6% to$17.19in 2014 while total book value per share increased by 4% to$28.17.Berkshirecontinues to manage its balance sheet with the objective of benefiting from expected future interest rate increases.

Berkshire's11% annualized fourth quarter loan growth resulted primarily from 15% annualized commercial loan growth, which matched the full year growth rate. Commercial growth was concentrated in diversified commercial and industrial loans in the fourth quarter, while for the full year commercial balances increased primarily due to higher commercial real estate loans. Residential mortgage balances advanced at a 14% annualized rate in the fourth quarter, including the benefit of stronger demand in the second half of the year. Residential mortgage growth was 8% for the year. Consumer loans grew by 11% for the year and declined by 5% annualized in the fourth quarter due to a planned de-emphasis of the auto loan portfolio.

Asset quality metrics remained favorable. Annualized net loan charge-offs measured 0.29% of average loans for the quarter. Quarter-end non-performing assets decreased to 0.37% of total assets and accruing delinquent loans measured 0.52% of total loans. The loan loss allowance was 0.76% of total loans; approximately 16% of quarter-end loans were balances recorded at fair value in recent bank acquisitions.

Annualized fourth quarter deposit growth of 8% included increases in all major categories. Growth was primarily in relationship oriented transaction accounts, with a concentration in new commercial balances. Full year deposit growth of 21% included 11% related to balances totaling$440 millionin acquired New York branches.

RESULTS OF OPERATIONS

The fourth quarter core return on tangible equity increased to 12.0% in 2014 compared to 10.5% in 2013. Net non-core charges in both periods were primarily related to acquisition and restructuring activity. GAAP return on equity improved to 6.5% from 6.2% in the above respective periods and the efficiency ratio improved to 62.5% from 63.2%.

The 20% year over year increase in fourth quarter core earnings per share reflected the benefit of 17% growth in core revenue, with an identical percentage increase in both net interest income and fee income. This resulted primarily from volume growth inBerkshire'sfootprint, particularly in newer markets inEastern Massachusettsand Central New York. Fee income grew in all major categories, including a 30% increase in deposit related fees primarily from theNew Yorkbranch acquisition.

Compared to the linked quarter, growth in core earnings per share was primarily driven by 4% growth in net interest income. This included the benefit of volume growth, together with an expansion of the net interest margin to 3.23% compared to 3.20% in the linked quarter; the margin was 3.26% in the fourth quarter of 2013. Net interest income includes purchased loan accretion which is largely comprised of recoveries on the resolution of impaired loans acquired in previous bank acquisitions. This accretion totaled$1.7 millionin the most recent quarter, compared to$1.2 millionin the linked quarter and$2.4 millionin the fourth quarter of 2013. Fourth quarter non-interest income was down 3% from the linked quarter, with seasonally lower fee income mostly offset by distributions from equity investments.

The loan loss provision totaled$3.9 millionin the fourth quarter. Net loan charge-offs were$3.2 million, and the loan loss allowance increased by$0.7 millionto$35.7 million.

Fourth quarter core non-interest expense increased by 1% over the prior quarter to$39.9 million. Non-core expense increased due to the pending Hampden merger. Full time equivalent staff totaled 1,091 at year-end. The core tax rate was 29% and the GAAP tax rate of 25% was due to the full year impact of the first quarter branch acquisition charges.

CONFERENCE CALL

Berkshirewill conduct a conference call/webcast at10:00 a.m. eastern timeonTuesday, January 27, 2015to discuss the results for the quarter and provide guidance about expected future results. Participants should dial-in to the call 10-15 minutes before it begins. Information about the conference call follows:

Dial-in: 888-317-6003
Elite Entry Number: 1730849
Webcast:berkshirebank.com (investor relations link)

A telephone replay of the call will be available throughWednesday, February 4, 2015by calling 877-344-7529 and entering conference number: 10058299 The webcast will be available atBerkshire'swebsite above for an extended period of time. A print-friendly version of this news release will be available at the web link shown above.

BACKGROUND

Berkshire Hills Bancorp is the parent of Berkshire Bank –America's Most Exciting Bank®. The Company has$6.5 billionin assets and 91 full-service branch offices inMassachusetts,New York,Connecticut, andVermontproviding personal and business banking, insurance, and wealth management services.Berkshirehas a pending agreement to acquire Hampden Bancorp, the parent ofHampden Bank, which has$706 millionin assets and operates ten offices in theSpringfield, Massachusettsarea.

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS - UNAUDITED - (F-1)

	December 31,	September 30,	December 31,
(In thousands)	2014	2014	2013
Assets
Cash and due from banks	$ 54,179	$ 58,624	$ 56,841
Short-term investments	17,575	12,201	18,698
Total cash and short-term investments	71,754	70,825	75,539

Trading security	14,909	14,745	14,840
Securities available for sale, at fair value	1,091,818	1,058,965	760,048
Securities held to maturity, at amortized cost	43,347	42,596	44,921
Federal Home Loan Bank stock and other restricted securities	55,720	54,646	50,282
Total securities	1,205,794	1,170,952	870,091

Loans held for sale, at fair value	19,493	29,091	15,840

Residential mortgages	1,496,204	1,445,861	1,384,274
Commercial real estate	1,611,567	1,595,400	1,417,120
Commercial and industrial loans	804,366	732,960	687,293
Consumer loans	768,463	778,561	691,836
Total loans (1)	4,680,600	4,552,782	4,180,523
Less: Allowance for loan losses	(35,662)	(34,966)	(33,323)
Net loans	4,644,938	4,517,816	4,147,200

Premises and equipment, net	87,279	87,166	84,459
Other real estate owned	2,049	4,854	2,758
Goodwill	264,742	264,770	256,871
Other intangible assets	11,528	12,524	13,791
Cash surrender value of bank-owned life insurance	104,588	103,749	101,530
Deferred tax asset, net	28,776	38,503	50,711
Other assets	61,090	51,908	54,009
Total assets	$ 6,502,031	$ 6,352,158	$ 5,672,799

Liabilities and stockholders' equity
Demand deposits	$ 869,302	$ 844,480	$ 677,917
NOW deposits	426,108	420,290	353,612
Money market deposits	1,407,179	1,394,558	1,383,856
Savings deposits	496,344	474,774	431,496
Time deposits	1,455,746	1,429,231	1,001,648
Total deposits (1)	4,654,679	4,563,333	3,848,529

Senior borrowings	962,576	951,105	974,428
Subordinated borrowings	89,747	89,730	89,679
Total borrowings	1,052,323	1,040,835	1,064,107

Other liabilities	85,742	51,053	82,101
Total liabilities	5,792,744	5,655,221	4,994,737

Total stockholders' equity	709,287	696,937	678,062
Total liabilities and stockholders' equity	$ 6,502,031	$ 6,352,158	$ 5,672,799

(1) The Company acquired 20 branches in Central New York on January 17, 2014, including $440 million in deposits
and $4 million in loans.

BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED - (F-2)

LOAN ANALYSIS

					Annualized growth %
(Dollars in millions)	Dec. 31, 2014 Balance	Sept. 30, 2014 Balance		Dec. 31, 2013 Balance	Quarter ended December 31, 2014		Year to date

Total residential mortgages	$ 1,496	$ 1,446		$ 1,384	14	%	8	%

Commercial real estate	1,612	1,595		1,417	4		14
Commercial and industrial loans	804	733		688	39		17
Total commercial loans	2,416	2,328		2,105	15		15

Home equity	319	316		307	3		4
Auto and other	450	463		385	(12)		17
Total consumer loans	769	779		692	(5)		11
Total loans	$ 4,681	$ 4,553		$ 4,181	11	%	12	%


DEPOSIT ANALYSIS

					Annualized growth %
(Dollars in millions)	Dec. 31, 2014 Balance	Sept. 30, 2014 Balance	Acquired Balance (1)	Dec. 31, 2013 Balance	Quarter ended December 31, 2014		Year to date
Demand	$ 869	$ 844	$ 110	$ 678	12	%	28	%
NOW	426	420	80	354	6		20
Money market	1,407	1,395	124	1,384	3		2
Savings	497	475	36	431	19		15
Total non-maturity deposits	3,199	3,134	350	2,847	8		12

Total time deposits	1,456	1,429	90	1,002	8		45
Total deposits	$ 4,655	$ 4,563	$ 440	$ 3,849	8	%	21	%

(1) The Company acquired 20 branches in Central New York on January 17, 2014, including $440 million in deposits,
as shown above, and $4 million in loans.

BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED - (F-3)

	Three Months Ended		Years Ended
	December 31,		December 31,
(In thousands, except per share data)	2014	2013	2014	2013
Interest and dividend income
Loans	$ 45,706	$ 43,566	$ 174,467	$ 186,115
Securities and other	8,310	5,093	32,575	17,626
Total interest and dividend income	54,016	48,659	207,042	203,741
Interest expense
Deposits	5,109	5,166	19,185	20,859
Borrowings	2,260	3,651	9,166	14,130
Total interest expense	7,369	8,817	28,351	34,989
Net interest income	46,647	39,842	178,691	168,752
Non-interest income
Loan related income	1,763	1,578	6,328	8,247
Mortgage banking income	504	445	2,561	5,235
Deposit related fees	6,137	4,717	24,635	18,340
Insurance commissions and fees	2,223	2,143	10,364	10,020
Wealth management fees	2,373	2,212	9,546	8,683
Total fee income	13,000	11,095	53,434	50,525
Other	1,200	1,227	2,646	2,949
Gain on sale of securities, net	-	3,392	482	4,758
Loss on termination of hedges	-	-	(8,792)	-
Total non-interest income	14,200	15,714	47,770	58,232
Total net revenue	60,847	55,556	226,461	226,984
Provision for loan losses	3,898	3,100	14,968	11,378
Non-interest expense
Compensation and benefits	20,965	16,736	81,768	71,134
Occupancy and equipment	6,655	5,421	26,905	22,540
Technology and communications	3,702	3,169	14,764	12,944
Marketing and promotion	771	765	2,572	2,596
Professional services	1,205	1,558	4,211	6,569
FDIC premiums and assessments	1,083	899	4,284	3,473
Other real estate owned and foreclosures	232	255	801	700
Amortization of intangible assets	996	1,239	4,812	5,268
Merger, restructuring and conversion expenses	1,762	2,493	8,491	14,848
Other	4,305	4,622	17,378	17,287
Total non-interest expense	41,676	37,157	165,986	157,359

Income before income taxes	15,273	15,299	45,507	58,247
Income tax expense	3,875	4,762	11,763	17,104
Net income	$ 11,398	$ 10,537	$ 33,744	$ 41,143

Earnings per share:
Basic	$ 0.46	$ 0.43	$ 1.36	$ 1.66
Diluted	$ 0.46	$ 0.42	$ 1.36	$ 1.65

Weighted average shares outstanding:
Basic	24,758	24,701	24,730	24,802
Diluted	24,912	24,857	24,854	24,965

(1) The Company acquired 20 branches in Central New York on January 17, 2014. The income statement for the three
months ended March 31, 2014 includes operations of the branch acquisition beginning on that date.
(2) Merger, restructuring and conversion expenses include branch acquisition related expenses and bank charter
change related expenses.

BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED - (F-4)
	Quarters Ended
	Quarters Ended
	Dec. 31,	Sept. 30,	June 30,	Mar. 31,	Dec. 31,
(In thousands, except per share data)	2014	2014	2014	2014	2013
Interest and dividend income
Loans	$ 45,706	$ 43,958	$ 42,309	$ 42,494	$ 43,566
Securities and other	8,310	8,098	8,866	7,301	5,093
Total interest and dividend income	54,016	52,056	51,175	49,795	48,659
Interest expense
Deposits	5,109	4,877	4,478	4,721	5,166
Borrowings	2,260	2,230	2,368	2,308	3,651
Total interest expense	7,369	7,107	6,846	7,029	8,817
Net interest income	46,647	44,949	44,329	42,766	39,842
Non-interest income
Loan related income	1,763	1,471	1,846	1,248	1,578
Mortgage banking income	504	994	691	372	445
Deposit related fees	6,137	6,449	6,610	5,439	4,717
Insurance commissions and fees	2,223	2,632	2,460	3,049	2,143
Wealth management fees	2,373	2,330	2,294	2,549	2,212
Total fee income	13,000	13,876	13,901	12,657	11,095
Other	1,200	520	402	524	1,227
Gain on sale of securities, net	-	245	203	34	3,392
Loss on termination of hedges	-	-	-	(8,792)	-
Total non-interest income	14,200	14,641	14,506	4,423	15,714
Total net revenue	60,847	59,590	58,835	47,189	55,556
Provision for loan losses	3,898	3,685	3,989	3,396	3,100
Non-interest expense
Compensation and benefits	20,965	20,665	20,279	19,859	16,736
Occupancy and equipment	6,655	6,780	6,656	6,814	5,421
Technology and communications	3,702	3,484	3,800	3,778	3,169
Marketing and promotion	771	659	621	521	765
Professional services	1,205	830	1,024	1,152	1,558
FDIC premiums and assessments	1,083	1,163	1,029	1,009	899
Other real estate owned and foreclosures	232	13	33	523	255
Amortization of intangible assets	996	1,236	1,274	1,306	1,239
Merger, restructuring and conversion expenses	1,762	238	190	6,301	2,493
Other	4,305	4,619	4,357	4,097	4,622
Total non-interest expense	41,676	39,687	39,263	45,360	37,157

Income (loss) before income taxes	15,273	16,218	15,583	(1,567)	15,299
Income tax expense (benefit)	3,875	4,230	4,119	(461)	4,762
Net income (loss)	$ 11,398	$ 11,988	$ 11,464	$ (1,106)	$ 10,537


Earnings (loss) per share:
Basic	$ 0.46	$ 0.48	$ 0.46	$ (0.04)	$ 0.43
Diluted	$ 0.46	$ 0.48	$ 0.46	$ (0.04)	$ 0.42

Weighted average shares outstanding:
Basic	24,758	24,747	24,715	24,698	24,701
Diluted	24,912	24,861	24,809	24,698	24,857

(1) See notes on Page F-3

BERKSHIRE HILLS BANCORP, INC.
ASSET QUALITY ANALYSIS - UNAUDITED - (F-5)

	At or for the Quarters Ended
	Dec. 31,	Sept. 30,	June 30,	Mar. 31,	Dec. 31,
(Dollars in thousands)	2014	2014	2014	2014	2013
NON-PERFORMING ASSETS
Non-accruing loans:
Residential mortgages	$ 3,908	$ 4,810	$ 5,295	$ 6,071	$ 7,867
Commercial real estate	12,878	12,192	12,583	13,036	13,739
Commercial and industrial loans	1,705	2,225	4,821	2,411	2,356
Consumer loans	3,214	3,660	3,359	3,846	3,493
Total non-accruing loans	21,705	22,887	26,058	25,364	27,455
Other real estate owned	2,049	4,854	2,445	2,418	2,758
Total non-performing assets	$ 23,754	$ 27,741	$ 28,503	$ 27,782	$ 30,213

Total non-accruing loans/total loans	0.46%	0.50%	0.59%	0.60%	0.66%
Total non-performing assets/total assets	0.37%	0.44%	0.45%	0.46%	0.53%

PROVISION AND ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period	$ 34,966	$ 34,353	$ 33,602	$ 33,323	$ 33,248
Charged-off loans	(3,660)	(3,360)	(3,516)	(3,317)	(3,462)
Recoveries on charged-off loans	458	288	278	200	437
Net loans charged-off	(3,202)	(3,072)	(3,238)	(3,117)	(3,025)
Provision for loan losses	3,898	3,685	3,989	3,396	3,100
Balance at end of period	$ 35,662	$ 34,966	$ 34,353	$ 33,602	$ 33,323

Allowance for loan losses/total loans	0.76%	0.77%	0.77%	0.79%	0.80%
Allowance for loan losses/non-accruing loans	164%	153%	132%	132%	121%

NET LOAN CHARGE-OFFS
Residential mortgages	$ (181)	$ (394)	$ (602)	$ (1,055)	$ (564)
Commercial real estate	(1,810)	(1,470)	(1,028)	(1,105)	(763)
Commercial and industrial loans	(540)	(687)	(1,341)	(215)	(1,042)
Home equity	(240)	(193)	(51)	(458)	45
Auto and other consumer	(431)	(328)	(216)	(284)	(701)
Total, net	$ (3,202)	$ (3,072)	$ (3,238)	$ (3,117)	$ (3,025)

Net charge-offs (QTD annualized)/average loans	0.29%	0.28%	0.31%	0.30%	0.31%
Net charge-offs (YTD annualized)/average loans	0.29%	0.29%	0.30%	0.30%	0.29%

DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS
30-89 Days delinquent	0.42%	0.32%	0.34%	0.37%	0.51%
90+ Days delinquent and still accruing	0.10%	0.12%	0.21%	0.22%	0.22%
Total accruing delinquent loans	0.52%	0.44%	0.55%	0.59%	0.73%
Non-accruing loans	0.46%	0.50%	0.59%	0.60%	0.66%
Total delinquent and non-accruing loans	0.98%	0.94%	1.14%	1.19%	1.39%

BERKSHIRE HILLS BANCORP, INC.
SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED - (F-6)

		At or for the Quarters Ended
		Dec. 31,		Sept. 30,		June 30,		Mar. 31,		Dec. 31,
		2014		2014		2014		2014		2013

PER SHARE DATA
	Core earnings, diluted	$ 0.48		$ 0.46		$ 0.44		$ 0.42		$ 0.40
	Net earnings, diluted	0.46		0.48		0.46		(0.04)		0.42
	Tangible book value	17.19		16.67		16.40		15.84		16.27
	Total book value	28.17		27.69		27.49		26.99		27.08
	Market price at period end	26.66		23.49		23.22		25.88		27.27
	Dividends	0.18		0.18		0.18		0.18		0.18

PERFORMANCE RATIOS
	Core return on assets	0.75	%	0.73	%	0.71	%	0.71	%	0.73	%
	Return on assets	0.71		0.77		0.75		(0.08)		0.77
	Core return on equity	6.89		6.59		6.32		6.02		5.87
	Core return on tangible equity	11.96		11.76		11.34		10.84		10.47
	Return on equity	6.52		6.95		6.64		(0.64)		6.18
	Net interest margin, fully taxable equivalent	3.23		3.20		3.26		3.35		3.26
	Fee income/Net interest and fee income	21.79		23.59		23.87		22.84		21.78
	Efficiency ratio	62.46		62.89		62.96		64.42		63.21

GROWTH
	Total commercial loans, year-to-date (annualized)	15	%	14	%	19	%	9	%	5	%
	Total loans, year-to-date (annualized)	12		12		13		6		5
	Total net revenues, year-to-date, compared to prior year	(0)		(3)		(7)		(17)		15
	Core earnings per share, year-to-date, compared to prior year	(4)		(10)		(15)		(22)		(6)
	Earnings per share, year-to-date, compared to prior year	(18)		(27)		(54)		(110)		11

FINANCIAL DATA(In millions)
	Total assets	$ 6,502		$ 6,352		$ 6,311		$ 6,010		$ 5,673
	Total earning assets	5,923		5,765		5,700		5,408		5,085
	Total loans	4,681		4,553		4,450		4,243		4,181
	Allowance for loan losses	36		35		34		34		33
	Total intangible assets	276		277		279		280		271
	Total deposits	4,655		4,563		4,479		4,219		3,849
	Total stockholders' equity	709		697		690		678		678
	Total core income	12.0		11.4		10.9		10.4		10.0
	Total net income	11.4		12.0		11.5		(1.1)		10.5

ASSET QUALITY RATIOS
	Net charge-offs (current quarter annualized)/average loans	0.29	%	0.28	%	0.31	%	0.30	%	0.31	%
	Allowance for loan losses/total loans	0.76		0.77		0.77		0.79		0.80

CONDITION RATIOS
	Stockholders' equity to total assets	10.91	%	10.97	%	10.94	%	11.27	%	11.95	%
	Tangible stockholders' equity to tangible assets	6.95		6.91		6.81		6.94		7.54
	Investments to total assets	18.54		18.43		18.99		19.05		15.34
	Loans/deposits	101		100		99		101		109


(1)	Reconciliation of Non-GAAP financial measures, including all references to core and tangible amounts, appear on pages F-9 & F-10.
	Tangible assets are total assets less total intangible assets.
(2)	All performance ratios are annualized and are based on average balance sheet amounts, where applicable.
(3)	See note on tangible equity on pages F-9 & F-10.

BERKSHIRE HILLS BANCORP, INC.
AVERAGE BALANCES - UNAUDITED - (F-7)

	Quarters Ended
	Dec. 31,	Sept. 30,	June 30,	Mar. 31,	Dec. 31,
(In thousands)	2014	2014	2014	2014	2013
Assets
Loans:
Residential mortgages	$ 1,468,271	$ 1,412,720	$ 1,379,625	$ 1,379,266	$ 1,330,674
Commercial real estate	1,611,343	1,579,258	1,488,462	1,420,382	1,381,628
Commercial and industrial loans	733,750	716,787	703,798	684,776	673,292
Consumer loans	782,584	763,296	729,654	699,598	687,540
Total loans	4,595,948	4,472,061	4,301,539	4,184,022	4,073,134
Securities	1,190,182	1,169,765	1,225,646	1,047,658	813,417
Short-term investments and loans held for sale	54,843	39,496	28,426	28,631	35,438
Total earning assets	5,840,973	5,681,322	5,555,611	5,260,311	4,921,989
Goodwill and other intangible assets	276,645	277,775	279,024	278,386	271,147
Other assets	304,909	305,698	311,176	312,145	305,617
Total assets	$ 6,422,527	$ 6,264,795	$ 6,145,811	$ 5,850,842	$ 5,498,753

Liabilities and stockholders' equity
Deposits:
NOW	$ 415,806	$ 417,802	$ 425,824	$ 409,631	$ 348,600
Money market	1,426,722	1,405,454	1,448,624	1,490,408	1,392,570
Savings	479,988	480,036	481,790	463,615	435,766
Time	1,425,865	1,406,914	1,152,651	1,069,987	1,044,850
Total interest-bearing deposits	3,748,381	3,710,206	3,508,889	3,433,641	3,221,786
Borrowings	1,053,884	980,135	1,113,431	899,458	857,848
Total interest-bearing liabilities	4,802,265	4,690,341	4,622,320	4,333,099	4,079,634
Non-interest-bearing demand deposits	863,795	824,489	779,775	749,982	681,368
Other liabilities	56,805	60,088	52,712	76,258	56,261
Total liabilities	5,722,865	5,574,918	5,454,807	5,159,339	4,817,263

Total stockholders' equity	699,662	689,877	691,004	691,503	681,490

Total liabilities and stockholders' equity	$ 6,422,527	$ 6,264,795	$ 6,145,811	$ 5,850,842	$ 5,498,753


Supplementary data
Total non-maturity deposits	$ 3,186,311	$ 3,127,781	$ 3,136,013	$ 3,113,636	$ 2,858,304
Total deposits	4,612,176	4,534,695	4,288,664	4,183,623	3,903,154
Fully taxable equivalent income adjustment	887	859	852	718	639
Total average tangible equity	423,017	412,102	411,980	413,117	410,343


(1) Average balances for securities available-for-sale are based on amortized cost. Total loans include non-accruing loans.
(2) Total average tangible equity results from the subtraction of average goodwill and other intangible assets from
total average stockholders' equity.
(3) The average balances of deposits include the deposits held for sale presented under other liabilities on the consolidated
balance sheet.

BERKSHIRE HILLS BANCORP, INC.
AVERAGE YIELDS (Fully Taxable Equivalent - Annualized) - UNAUDITED - (F-8)

	Quarters Ended
	Dec. 31,		Sept. 30,		June 30,		Mar. 31,		Dec. 31,
	2014		2014		2014		2014		2013

Earning assets
Loans:
Residential mortgages	3.88	%	3.86	%	3.99	%	4.12	%	3.98	%
Commercial real estate	4.18		4.26		4.20		4.49		4.73
Commercial and industrial loans	4.22		3.79		3.82		3.97		3.91
Consumer loans	3.35		3.34		3.49		3.56		4.01
Total loans	3.96		3.91		3.96		4.13		4.26
Securities	3.00		2.98		3.13		3.04		2.72
Short-term investments and loans held for sale	1.37		1.65		1.40		1.51		1.92
Total earning assets	3.73		3.70		3.76		3.89		3.97

Funding liabilities
Deposits:
NOW	0.15		0.17		0.15		0.15		0.18
Money market	0.42		0.37		0.36		0.37		0.44
Savings	0.14		0.14		0.16		0.16		0.16
Time	0.91		0.91		0.98		1.15		1.25
Total interest-bearing deposits	0.54		0.52		0.51		0.56		0.64
Borrowings	0.85		0.90		0.85		1.04		1.69
Total interest-bearing liabilities	0.61		0.60		0.59		0.66		0.86

Net interest spread	3.12		3.10		3.17		3.23		3.11
Net interest margin	3.23		3.20		3.26		3.35		3.26

Cost of funds	0.52		0.51		0.51		0.56		0.73
Cost of deposits	0.44		0.43		0.42		0.46		0.53

(1) Cost of funds includes all deposits and borrowings.
(2) The average cost of deposits includes the deposits held for sale.

BERKSHIRE HILLS BANCORP, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - UNAUDITED - (F-9)

		At or for the Quarters Ended
		Dec. 31,		Sept. 30,		June 30,		Mar. 31,		Dec. 31,
(Dollars in thousands)		2014		2014		2014		2014		2013
Net income (loss)		$ 11,398		$ 11,988		$ 11,464		$ (1,106)		$ 10,537
Adj: Gain on sale of securities, net		-		(245)		(203)		(34)		(3,392)
Adj: Loss on termination of hedges		-		-		-		8,792		-
Adj: Merger and acquisition expenses		1,708		-		52		3,637		932
Adj: Restructuring and conversion expenses (5)		54		238		138		2,665		1,561
Adj: Out-of-period adjustment (6)		-		-		-		1,381		-
Adj: Income taxes		(1,114)		(612)		(536)		(4,923)		364
Total core income	(A)	$ 12,046		$ 11,369		$ 10,915		$ 10,412		$ 10,002

Total revenue		$ 60,847		$ 59,590		$ 58,835		$ 47,189		$ 55,556
Adj: Gain on sale of securities, net		-		(245)		(203)		(34)		(3,392)
Adj: Loss on termination of hedges		-		-		-		8,792		-
Adj: Out-of-period adjustment (6)		-		-		-		1,381		-
Total core revenue		$ 60,847		$ 59,345		$ 58,632		$ 57,328		$ 52,164

Total non-interest expense		$ 41,676		$ 39,687		$ 39,263		$ 45,360		$ 37,157
Less: Total non-core expense (see above)		(1,762)		(238)		(190)		(6,302)		(2,493)
Core non-interest expense		$ 39,914		$ 39,449		$ 39,073		$ 39,058		$ 34,664

(Dollars in millions, except per share data)
Total average assets	(B)	$ 6,423		$ 6,265		$ 6,146		$ 5,851		$ 5,499
Total average stockholders' equity	(C)	700		690		691		692		681
Total average tangible stockholders' equity	(D)	423		412		412		413		410
Total tangible stockholders' equity, period-end (7)	(E)	433		420		411		398		407

Total common shares outstanding, period-end (thousands)	(F)	25,183		25,173		25,115		25,105		25,036
Average diluted shares outstanding (thousands) (8)	(G)	24,912		24,861		24,809		24,833		24,857

Core earnings per share, diluted	(A/G)	$ 0.48		$ 0.46		$ 0.44		$ 0.42		$ 0.40
Tangible book value per share, period-end	(E/F)	$ 17.19		$ 16.67		$ 16.40		$ 15.84		$ 16.27

Core return on assets	(A/B)	0.75	%	0.73	%	0.71	%	0.71	%	0.73	%
Core return on equity	(A/C)	6.89		6.59		6.32		6.02		5.87
Core return on tangible equity (4)	(A/D)	11.96		11.76		11.34		10.84		10.47
Efficiency ratio (1)		62.46		62.89		62.96		64.42		63.21

Supplementary data
Tax credit benefit of tax shelter investments		$ 570		$ 555		$ 555		$ 555		$ 80
Intangible amortization		$ 996		$ 1,236		$ 1,274		$ 1,306		$ 1,239


(1) Efficiency ratio is computed by dividing total core tangible non-interest expense by the sum of total net interest income
on a fullytaxable equivalent basis and total core non-interest income adjusted to include tax credit benefit of tax shelter
investments. TheCompany uses this non-GAAP measure to provide important information regarding its operational
efficiency.

(2) Ratios are annualized and based on average balance sheet amounts, where applicable.

(3) Quarterly data may not sum to year-to-date data due to rounding.

(4) Core return on tangible equity is computed by dividing the total core income adjusted for the tax-affected amortization of
intangible assets, assuming a 40% marginal rate, by tangible equity.

(5) Bank charter change related expenses and prior period variable compensation are shown above under restructuring
and conversion expenses.

(6) The out of period adjustments shown above relate to interest income earned on loans acquired in bank acquisitions.

(7) Total tangible stockholders' equity is computed by taking total stockholders' equity less the intangible assets at period-end.

(8) Average diluted shares computed for core earnings per share differ from GAAP average diluted shares, in the first
quarter of 2014, due to the GAAP net loss compared to core net income for the period.

BERKSHIRE HILLS BANCORP, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - UNAUDITED - (F-10)

		At or for the Years Ended
		Dec. 31,		Dec. 31,
(Dollars in thousands)		2014		2013
Net income		$ 33,744		$ 41,143
Adj: Gain on sale of securities, net		(482)		(4,758)
Adj: Loss on termination of hedges		8,792		-
Adj: Merger and acquisition expenses		5,397		7,998
Adj: Restructuring and conversion expenses (5)		3,095		7,350
Adj: Out-of-period adjustment (6)		1,381		(1,287)
Adj: Income taxes		(7,185)		(3,750)
Total core income	(A)	$ 44,742		$ 46,696

Total revenue		$ 226,461		$ 226,984
Adj: Gain on sale of securities and other non-recurring gain, net		(482)		(4,758)
Adj: Loss on termination of hedges		8,792		-
Adj: Out-of-period adjustment (6)		1,381		(1,287)
Total core revenue		$ 236,152		$ 220,939

Total non-interest expense		$ 165,986		$ 157,359
Less: Total non-core expense (see above)		(8,492)		(15,348)
Core non-interest expense		$ 157,494		$ 142,011

(Dollars in millions, except per share data)
Total average assets	(B)	$ 6,171		$ 5,306
Total average stockholders' equity	(C)	693		675
Total average tangible stockholders' equity	(D)	415		403
Total tangible stockholders' equity, period-end (7)	(E)	433		407
Total common shares outstanding, period-end (thousands)	(F)	25,183		25,036
Average diluted common shares outstanding (thousands)	(G)	24,854		24,965

Core earnings per common share, diluted	(A/G)	$ 1.80		$ 1.87
Tangible book value per common share, period-end	(E/F)	$ 17.19		$ 16.27

Core return on assets	(A/B)	0.73	%	0.88	%
Core return on equity	(A/C)	6.46		6.92
Core return on tangible equity (4)	(A/D)	11.48		12.37
Efficiency ratio (1)		63.17		60.79

Supplementary data
GAAP return on assets		0.55	%	0.78	%
GAAP return on equity		4.87		6.09
Net interest margin		3.26		3.63
Tax credit benefit of tax shelter investments		$ 2,234		$ 1,455
Intangible amortization		$ 4,812		$ 5,268


(1) Efficiency ratio is computed by dividing total core tangible non-interest expense by the sum of total net interest income
on a fullytaxable equivalent basis and total core non-interest income adjusted to include tax credit benefit of tax
shelter investments. The Company uses this non-GAAP measure to provide important information regarding its
operational efficiency.

(2) Ratios are annualized and based on average balance sheet amounts, where applicable.

(3) Quarterly data may not sum to year-to-date data due to rounding.

(4) Core return on tangible equity is computed by dividing the total core income adjusted for the tax-affected amortization
ofintangible assets, assuming a 40% marginal rate, by tangible equity.

(5) Bank charter change related expenses and prior period variable compensation are shown above under restructuring
and conversion expenses.

(6) The out of period adjustments shown above relate to interest income earned on loans acquired in bank acquisitions.

(7) Total tangible stockholders' equity is computed by taking total stockholders' equity less the intangible assets at
period-end.

PITTSFIELD, Mass.,Jan. 26, 2015/PRNewswire/ --Berkshire Hills Bancorp, Inc