Berkshire Hills Reports Another Strong Quarter With Fourth Quarter EPS of $0.44 and $2.06 for the Year

Dividend Declared; Annual Meeting Date Set


PITTSFIELD, Mass., Jan. 26, 2009 (GLOBE NEWSWIRE) -- Berkshire Hills Bancorp (Nasdaq:BHLB) reported fourth quarter earnings totaled $5.2 million, or $0.44 per share. For the year 2008, earnings were $22.2 million, or $2.06 per share. Core earnings per share increased by 8% in 2008, reflecting the benefit of acquisitions and organic growth. GAAP earnings per share increased by 43% due to non-core charges in 2007.

Most categories of income and expense increased in the first nine months of 2008 including the benefit of the acquired Vermont operations. Results in 2007 included non-core charges primarily due to the completion of that merger and a related balance sheet restructuring. Net income in 2007 totaled $13.5 million, or $1.44 per share. Fourth quarter 2007 net income was $3.1 million, or $0.29 per share.

Fourth Quarter Financial Highlights



 * $0.44 core earnings per share vs. $0.36 in 2007; GAAP EPS of
   $0.44 vs. $0.29
 * 0.48% nonperforming assets to total assets at year-end; accruing
   delinquent loans were 0.51% of total loans
 * 0.27% annualized charge-offs on average loans
 * Public issuance of nearly $40 million in common stock and the
   issuance of $40 million of preferred stock under the U.S.
   Treasury Capital Purchase Program

Annual Financial Highlights



 * 8% increase in core EPS; 43% increase in GAAP EPS
 * 12% increase in year-end tangible book value per share to $15.47;
   3% decrease in total book value per share to $30.07
 * 21% increase in total net revenue
 * 3.44% net interest margin
 * 8% increase in total commercial loans; 7% increase in total
   residential mortgage and home equity loans
 * 61.4% efficiency ratio, improved from 62.9% in 2007

Michael P. Daly, President and Chief Executive Officer, stated, "We had another solid quarter, and finished out a strong year with higher earnings and earnings per share. We generated positive operating leverage due to organic growth and the benefit of our Vermont operations acquired last year. Despite growing headwinds towards the end of the year, we generated higher earnings and core earnings per share in every quarter of the year."

Mr. Daly continued, "We produced these solid results despite the impact of our October common stock offering, which reduced EPS by $0.06 in the fourth quarter and by $0.07 for the year. This successful public offering totaled nearly $40 million and bolstered our equity capital, which totaled 15% of total assets at year-end -- our highest equity capital ratio since we went public. We combined the common equity with $40 million in preferred stock issued under the Treasury Capital Purchase Program to better position the Company to expand the flow of credit and support economic vitality in the communities that we serve."

Mr. Daly concluded, "Our loan performance continued to hold up through year-end, and our charge-offs remained modest in 2008. We also had no writedowns on any of our investment securities during the year and our investment portfolio remained high quality at year-end. We recognize that the coming year will be challenging for our industry and we will again be disciplined in our budgeting process. The interest rate reductions by the Federal Reserve Bank have negatively impacted our pricing, thereby reducing our net interest margin. Should economic conditions continue to deteriorate in 2009, it is likely that we will increase our provision despite our strong loan performance through year-end 2008. We will also be incurring some earnings dilution from the common stock offering and the Treasury preferred stock. We aggressively supplemented our capital to prepare for the current environment, and we plan to be proactive in developing programs to meet the needs of our markets and in working promptly to address loan problems if they develop."

DIVIDEND DECLARED

The Board of Directors declared a quarterly cash dividend of $0.16 per share to stockholders of record at the close of business on February 12, 2009 and payable on February 26, 2009. Common stock dividends totaled $0.63 per share in 2008, an increase of 9% over 2007.

ANNUAL MEETING SET

The 2009 annual meeting of stockholders will be held on May 7, 2009 at the Crowne Plaza Hotel, One West Street, Pittsfield, Massachusetts at 10:00 A.M. (ET). The voting record date has been set as March 10, 2009.

FINANCIAL CONDITION

Total assets were $2.7 billion at year-end 2008, increasing by 6% over year-end 2007. Total loans increased by 8% in 2008 excluding auto loans, reflecting growth in total commercial loans, along with higher residential mortgage and home equity loans. Growth in commercial real estate loans mostly reflected loan opportunities previously serviced by national providers in the Company's New England lending areas. Home equity loan growth was due to new lines opened as a result of relationship promotions. Residential and home equity underwriting is based on prime lending standards with 80% maximum loan-to-value. Commercial business loans decreased due to paydowns. The bank made a decision early in the year to discontinue originations of indirect auto loans and this portfolio is declining as existing balances runoff. Fourth quarter loan activity generally reflected these annual trends.

In the fourth quarter, securities available for sale increased by $71 million and short term investments increased by $10 million, primarily reflecting the utilization of stock issuance proceeds pending further investment activities in 2009. Securities purchases consisted primarily of short duration collateralized mortgage obligations issued by federal agencies. The Company's securities portfolio consists primarily of U.S. agency mortgage backed securities, and municipal and economic development bonds. All debt securities are rated investment grade except for $40 million in unrated local municipal and economic development bonds. The total unrealized loss on securities available for sale was $3 million at year-end 2008, all of which was deemed to be temporary.

The Company's problem loan measures at year-end 2008 remained comparatively low and were not significantly changed from the prior year-end. Year-end 2008 nonperforming assets totaled 0.48% of total assets, and accruing delinquent loans were up moderately to 0.51% of total loans. The year-end loan loss allowance was 1.14% of total loans for 2008 and 2007. The portion of the allowance assigned to specific reserves on impaired loans was $1.0 million at year-end 2008 and $1.2 million at year-end 2007.

Total deposits increased by $7 million to $1.83 billion in 2008. Deposit activity included an estimated $45 million in targeted run-off of higher cost municipal, commercial, and brokered time deposit accounts primarily in the second quarter. Estimated deposit growth excluding this run-off was 3%. Most of the Company's retail deposit and loan promotions are linked to companion checking accounts. The Company offers 100% insurance on all deposit balances due to its participation in the Massachusetts Depositors Insurance Fund. The Bank expects to benefit from the temporary increase in FDIC deposit insurance limits and it is also participating in the optional temporary unlimited transaction account insurance offered by the FDIC.

Stockholders' equity increased by $82 million in 2008 primarily due to the benefit of the common and preferred stock offerings. The contribution from earnings was partially offset by dividends and an unrealized mark-to-market loss on interest rate swaps. Total equity to assets increased to 15.3% at year-end 2008, while tangible equity to assets measured 9.2%. The risk based capital ratio of Berkshire Bank was approximately 12% at year-end. Total return on equity was 6.5% in 2008, while the core return on tangible equity was 16.2%. The Company views this latter measure as an important measure of its capital generation and capital strength. Tangible common book value per share was $15.47 at year-end 2008, compared to $13.82 at the prior year-end. Total common book value per share was $30.07 and $31.15 at these two dates, respectively.

RESULTS OF OPERATIONS

Most major categories of income and expense increased in 2008 primarily due to the contribution of Vermont operations resulting from the Factory Point Bancorp acquisition in September 2007. Total annual core revenue increased by 16%, while total core income increased by 25%. Several non-core charges related principally to the Factory Point acquisition reduced revenue and income in 2007. As a result, total GAAP revenue increased by 21% and total GAAP earnings increased by 64% in 2008 compared to 2007. Fourth quarter GAAP earnings increased by 69%, including results from Vermont operations in both periods. The increase was primarily due to non-core charges and a larger loan loss provision in 2007.

Net interest income increased by 18% in 2008 and increased sequentially in all quarters during the year. Average earning assets also increased sequentially in each quarter in 2008, with the fourth quarter average exceeding the 2007 fourth quarter average by 6%. This was primarily driven by continuous loan growth, despite the impact of runoff in the indirect auto loan portfolio. The net interest margin increased sequentially in the first three quarters to a five year peak of 3.48%, and then declined in the fourth quarter to 3.41% due to market floors on deposit rates following the drop in the federal funds rate to the lowest levels since 1954. The net interest margin improvement to 3.44% in 2008 reflected disciplined loan and deposit pricing throughout the year, together with the benefit of the Factory Point acquisition and the related balance sheet restructuring in 2007.

Fee income increased by 14% in 2008, resulting from higher deposit, loan, and interest rate swap fee income. Insurance fees decreased by 1% in 2008 primarily due to softer pricing conditions in the property casualty markets. Wealth management fees increased by 29% in 2008; however they were adversely affected by stock market conditions in the fourth quarter. The stock market decline caused a 21% reduction in fourth quarter wealth management revenues. Non-interest income in 2007 included non-core balance sheet restructuring charges related to the Factory Point acquisition.

The loan loss provision increased by 7% in 2008, which was in line with the growth in total loans during the year. The 2008 loan loss provision was $4.6 million, while net loan charge-offs totaled $3.8 million in 2008, compared to $6.0 million in 2007.

The 9% increase in non-interest expense in 2008 was primarily due to the Factory Point acquisition. Fourth quarter results included the acquired Vermont operations in both 2008 and 2007, and fourth quarter core expenses were flat from year to year. Non-core charges were recorded in 2007 primarily due to the Factory Point acquisition, and there were additional non-core expense restructuring charges recorded in both years. The Bank's efficiency ratio improved to 59% in 2008, while the consolidated ratio improved to 61%. The effective income tax rate was 28% in both 2008 and 2007, and also in the most recent quarter. The tax rate in 2008 included a second quarter non-core credit resulting from the reduction in the valuation reserve for deferred state tax assets.

CONFERENCE CALL

The Company will conduct a conference call/webcast at 9:00 A.M. eastern time on Tuesday, January 27, 2009 to discuss the results for the quarter and the year, and guidance about expected future results. Additionally, the Company intends to post a document with supplemental information in the Investor Relations section of its web site at www.berkshirebank.com shortly before the commencement of the call.

Information about the conference call follows:



 Dial-in:  800-860-2442
 Webcast:  www.berkshirebank.com  (Investor Relations link)

A telephone replay of the call will be available until February 4, 2009 by calling 877-344-7529 and entering replay passcode: 426862. The webcast and a podcast will be available at the Company's website above for an extended period of time.

BACKGROUND

Berkshire Hills Bancorp is headquartered in Pittsfield, Massachusetts. It has approximately $2.7 billion in assets and is the parent of Berkshire Bank -- America's Most Exciting Bank(sm). The Company provides business and consumer banking, insurance, wealth management, and investment services through 48 banking and insurance offices in Western Massachusetts, Northeastern New York, and Southern Vermont. For more information, visit www.berkshirebank.com or call 800-773-5601.

The Berkshire Hills Bancorp, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5000

FORWARD LOOKING STATEMENTS

Statements in this news release regarding Berkshire Hills Bancorp that are not historical facts are "forward-looking statements". These statements reflect management's views of future events, and involve risks and uncertainties. For a discussion of factors that could cause actual results to differ materially from expectations, see "Forward Looking Statements" in the Company's 2007 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are available at the Securities and Exchange Commission's Internet website (www.sec.gov) and to which reference is hereby made. Actual future results may differ significantly from results discussed in these forward-looking statements, and undue reliance should not be placed on such statements. Except as required by law, the Company assumes no obligation to update any forward-looking statements.

NON-GAAP FINANCIAL MEASURES

This news release contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles ("GAAP"). These non-GAAP measures provide supplemental perspectives on operating results, performance trends, and financial condition. They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company's GAAP financial information. A reconciliation of non-GAAP financial measures to GAAP measures is included in the accompanying financial tables. In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders. The Company utilizes the non-GAAP measure of core earnings in evaluating operating trends, including components for core revenue and expense. These measures exclude amounts which the Company views as unrelated to its normalized operations, including merger costs and restructuring costs. Similarly, the efficiency ratio is also adjusted for these non-core items. Additionally, the Company adjusts core income to exclude amortization of intangibles to arrive at a measure of the underlying operating cash return for the benefit of stockholders. The Company also adjusts certain equity related measures to exclude intangible assets due to the importance of these measures to the investment community.



                         BERKSHIRE HILLS BANCORP, INC.
                     CONSOLIDATED BALANCE SHEETS - UNAUDITED
 --------------------------------------------------------------------
                               December 31, September 30, December 31,
 --------------------------------------------------------------------
 (In thousands)                    2008         2008          2007
 -------------------------------------------------------------------- 
 Assets
 Total cash and cash 
  equivalents                  $    26,582  $    26,445  $    33,259
 Fed funds sold & short-term
  investments                       18,216        8,124        7,883
 Trading securities                 18,144       15,267           --
 Securities available for sale,
  at fair value                    276,423      205,554      197,964
 Securities held to maturity, 
  at amortized cost                 25,872       25,923       39,456
 Federal Home Loan Bank stock       21,077       21,077       21,077
 Loans held for sale                 1,768        5,401        3,445

 Residential mortgages             677,254      672,004      657,045
 Commercial mortgages              808,591      794,780      704,764
 Commercial business loans         175,799      181,224      203,564
 Consumer loans                    345,508      344,359      378,643
 --------------------------------------------------------------------
 Total loans                     2,007,152    1,992,367    1,944,016
 Less: Allowance for loan 
  losses                           (22,908)     (22,886)     (22,116)
 --------------------------------------------------------------------
 Net loans                       1,984,244    1,969,481    1,921,900

 Premises and equipment, net        37,448       37,902       38,806
 Goodwill                          161,178      161,178      161,632
 Other intangible assets            17,652       18,490       20,820
 Cash surrender value of life
  insurance policies                35,668       35,331       35,316
 Other assets                       42,457       35,526       31,874
 --------------------------------------------------------------------
 Total assets                  $ 2,666,729  $ 2,565,699  $ 2,513,432
 --------------------------------------------------------------------

 Liabilities and stockholders'
  equity
 Demand deposits               $   233,040  $   227,271  $   231,994
 NOW deposits                      190,828      196,217      213,150
 Money market deposits             448,238      450,818      439,341
 Savings deposits                  211,156      220,800      210,186
 --------------------------------------------------------------------
 Total non-maturity deposits     1,083,262    1,095,106    1,094,671
 Brokered time deposits              2,942        3,008       21,497
 Other time deposits               743,376      739,090      706,395
 --------------------------------------------------------------------
 Total time deposits               746,318      742,098      727,892
 --------------------------------------------------------------------
 Total deposits                  1,829,580    1,837,204    1,822,563
 --------------------------------------------------------------------

 Borrowings                        359,157      366,092      334,474
 Junior subordinated 
  debentures                        15,464       15,464       15,464
 Derivative liabilities             23,868        2,608           --
 Due to broker                      19,895           --           --
 Other liabilities                  10,340       11,649       14,094
 --------------------------------------------------------------------
 Total liabilities               2,258,304    2,233,017    2,186,595

 Total stockholders' equity        408,425      332,682      326,837
 --------------------------------------------------------------------
 Total liabilities and
  stockholders' equity         $ 2,666,729  $ 2,565,699  $ 2,513,432
 --------------------------------------------------------------------

                       BERKSHIRE HILLS BANCORP, INC.
              CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED
 ---------------------------------------------------------------------

                             LOAN ANALYSIS
                             -------------
                                                    Sept. 30, Dec. 31,
                              Dec. 31, 2008           2008      2007
 ---------------------------------------------------------------------
                                  Quarterly
                                  annualized Annual
 (Dollars in millions)    Balance   growth   growth  Balance  Balance
 ---------------------------------------------------------------------
  Residential mortgages:
  1 - 4 Family             $  642       4%       5%   $  636   $  610
  Construction                 35     (11)     (26)       36       47
 ---------------------------------------------------------------------
  Total residential 
   mortgages                  677       3        3       672      657

  Commercial mortgages:
  Construction                130     (12)       4       134      125
  Single and multi-family      70      --        1        70       69
  Other commercial 
   mortgages                  608      12       19       591      510
 ---------------------------------------------------------------------
  Total commercial 
   mortgages                  808       7       15       795      704

  Commercial business 
   loans                      176     (11)     (14)      181      204
 ---------------------------------------------------------------------
  Total commercial loans      984       3        8       976      908

  Consumer loans:
  Auto and other              140     (43)     (34)      157      211
  Home equity                 206      41       23       187      168
 ---------------------------------------------------------------------
  Total consumer loans        346       2       (9)      344      379
 ---------------------------------------------------------------------
  Total loans              $2,007       3%       3%   $1,992   $1,944
 ---------------------------------------------------------------------

                             DEPOSIT ANALYSIS
                             ----------------
                                                    Sept. 30, Dec. 31,
                              Dec. 31, 2008           2008      2007
 ---------------------------------------------------------------------
                                  Quarterly
                                  annualized Annual
 (Dollars in millions)    Balance   growth   growth  Balance  Balance
 ---------------------------------------------------------------------
 Demand                    $  233      11%      --%   $  227   $  232
 NOW                          191     (10)     (10)      196      213
 Money market                 448      (3)       2       451      439
 Savings                      211     (18)      --       221      211
 --------------------------------------------------------------------- 
 Total non-maturity 
  deposits                  1,083      (4)      (1)    1,095    1,095

 Time less than $100,000      392      (2)      (4)      394      409
 Time $100,000 or more        351       7       18       345      298
 Brokered time                  3      --      (86)        3       21
 ---------------------------------------------------------------------
 Total time deposits          746       2        2       742      728
 ---------------------------------------------------------------------
 Total deposits            $1,829      (2)%     --%   $1,837   $1,823
 ---------------------------------------------------------------------

                        BERKSHIRE HILLS BANCORP, INC.
                CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
 --------------------------------------------------------------------

                           Three Months Ended         Years Ended
                               December 31,           December 31,
 --------------------------------------------------------------------
 (In thousands, except 
   per share data)            2008       2007       2008       2007
 --------------------------------------------------------------------
 Interest and dividend
  income
 Loans                     $  29,343  $  32,666  $ 120,567  $ 120,059
 Securities and other          3,419      3,183     12,644     11,885
 --------------------------------------------------------------------
 Total interest and
  dividend income             32,762     35,849    133,211    131,944
 Interest expense
 Deposits                      9,248     13,749     41,733     50,597
 Borrowings and junior
  subordinated debentures      4,044      3,882     15,738     17,422
 --------------------------------------------------------------------
 Total interest expense       13,292     17,631     57,471     68,019
 --------------------------------------------------------------------
 Net interest income          19,470     18,218     75,740     63,925
 Non-interest income
 Insurance commissions and
  fees                         2,139      2,290     13,619     13,728
 Deposit service fees          2,623      2,620      9,782      7,747
 Wealth management fees        1,171      1,476      5,704      4,407
 Loan service and interest
  rate swap fees                 203         91      1,229        772
 --------------------------------------------------------------------
 Total fee income              6,136      6,477     30,334     26,654
 Other                           241        551      1,283      1,710
 Loss on sale of
  securities, net                 --         --        (22)      (591)
 Loss on prepayment of
  borrowings, net                 --         --         --     (1,180)
 Gain (loss) on sale of
  loans, net                      --         41         --     (1,950)
 --------------------------------------------------------------------
 Total non-interest income     6,377      7,069     31,595     24,643
 --------------------------------------------------------------------
 Total net revenue            25,847     25,287    107,335     88,568
 Provision for loan losses     1,400      3,060      4,580      4,300
 Non-interest expense
 Salaries and employee
  benefits                     8,988      9,386     38,282     34,018
 Occupancy and equipment       2,736      2,656     11,238      9,945
 Marketing, data
  processing, and
  professional services        2,338      2,275      8,761      8,598
 Non-recurring expense            --      1,198        683      2,956
 Amortization of intangible
  assets                         838      1,050      3,830      3,058
 Other                         2,356      1,828      8,905      6,919
 --------------------------------------------------------------------
 Total non-interest expense   17,256     18,393     71,699     65,494
 --------------------------------------------------------------------

 Income before income taxes    7,191      3,834     31,056     18,774
 Income tax expense            1,985        761      8,812      5,239
 --------------------------------------------------------------------
 Net income                $   5,206  $   3,073  $  22,244  $  13,535
 --------------------------------------------------------------------

 --------------------------------------------------------------------
 Basic earnings per common
  share                    $    0.44  $    0.29  $    2.08  $    1.47
 --------------------------------------------------------------------

 --------------------------------------------------------------------
 Diluted earnings per
  common share             $    0.44  $    0.29  $    2.06  $    1.44
 --------------------------------------------------------------------

 Weighted average common
  shares outstanding

 Basic                        11,804     10,524     10,700      9,223
 Diluted                      11,892     10,664     10,791      9,370


                   BERKSHIRE HILLS BANCORP, INC.
          CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
 ---------------------------------------------------------------------
                                       Quarters Ended
 ---------------------------------------------------------------------
 (In thousands,       
  except per share    Dec. 31,  Sept. 30, June 30,  Mar. 31,  Dec. 31,
  data)                 2008      2008      2008      2008      2007  
 ---------------------------------------------------------------------
 Interest and dividend
  income
 Loans                $ 29,343  $ 30,078  $ 29,823  $ 31,323  $ 32,666
 Securities and other    3,419     3,014     3,011     3,200     3,183
 ---------------------------------------------------------------------
 Total interest and
  dividend income       32,762    33,092    32,834    34,523    35,849
 Interest expense
 Deposits                9,248     9,676    10,521    12,288    13,749
 Borrowings and junior
  subordinated
  debentures             4,044     4,087     3,666     3,941     3,882
 ---------------------------------------------------------------------
 Total interest
  expense               13,292    13,763    14,187    16,229    17,631
 ---------------------------------------------------------------------
 Net interest income    19,470    19,329    18,647    18,294    18,218
 Non-interest income
 Insurance commissions
  and fees               2,139     2,640     3,694     5,146     2,290
 Deposit service fees    2,623     2,518     2,486     2,155     2,620
 Wealth management
  fees                   1,171     1,338     1,567     1,628     1,476
 Loan service and
  interest rate swap
  fees                     203       561       228       237        91
 ---------------------------------------------------------------------
 Total fee income        6,136     7,057     7,975     9,166     6,477
 Other                     241       174       562       306       551
 Gain (loss) on
  securities, net           --         4       (26)       --        --
 Gain on sale of
  loans, net                --        --        --        --        41
 ---------------------------------------------------------------------
 Total non-interest
  income                 6,377     7,235     8,511     9,472     7,069
 ---------------------------------------------------------------------
 Total net revenue      25,847    26,564    27,158    27,766    25,287
 Provision for loan
  losses                 1,400     1,250     1,105       825     3,060
 Non-interest expense
 Salaries and employee
  benefits               8,988     9,796     9,842     9,656     9,386
 Occupancy and
  equipment              2,736     2,760     2,774     2,968     2,656
 Marketing, data
  processing, and
  professional
  services               2,338     2,121     2,181     2,121     2,275
 Non-recurring expense      --        --       683        --     1,198
 Amortization of
  intangible assets        838       889     1,019     1,084     1,050
 Other                   2,356     2,171     2,133     2,245     1,828
 ---------------------------------------------------------------------
 Total non-interest
  expense               17,256    17,737    18,632    18,074    18,393
 ---------------------------------------------------------------------
 Income before income
  taxes                  7,191     7,577     7,421     8,867     3,834
 Income tax expense      1,985     2,301     1,708     2,818       761
 ---------------------------------------------------------------------
 Net income           $  5,206  $  5,276  $  5,713  $  6,049  $  3,073
 ---------------------------------------------------------------------

 Basic earnings per
  share               $   0.44  $   0.51  $   0.55  $   0.58  $   0.29

 Diluted earnings per
  share               $   0.44  $   0.51  $   0.55  $   0.58  $   0.29

 Weighted average
  shares outstanding
 Basic                  11,804    10,303    10,302    10,386    10,524
 Diluted                11,892    10,400    10,384    10,457    10,664


              BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
                       ASSET QUALITY ANALYSIS
 ----------------------------------------------------------------------

                                At or for the Quarters Ended
 ----------------------------------------------------------------------
 (Dollars in          Dec. 31,  Sept. 30, June 30,  Mar. 31,  Dec. 31,
  thousands)            2008      2008      2008      2008      2007
 ----------------------------------------------------------------------
 NON-PERFORMING ASSETS
 Nonaccruing loans:
 Residential
  mortgages           $  1,646  $  1,315  $    763  $  1,060  $    726
 Commercial mortgages    7,738     6,178     5,329     7,082     5,177
 Commercial business
  loans                  1,921     2,210     3,103     3,557     4,164
 Indirect auto and
  installment loans        693       576       503       374       346
 Home equity               173        74        74        67        95
 ----------------------------------------------------------------------
 Total nonaccruing
  loans                 12,171    10,353     9,772    12,140    10,508
 Other real estate
  owned                    498       941     1,050       755       866
 ----------------------------------------------------------------------
 Total nonperforming
  assets              $ 12,669  $ 11,294  $ 10,822  $ 12,895  $ 11,374
 ----------------------------------------------------------------------

 Total nonperforming
  loans/total loans       0.61%     0.52%     0.49%     0.63%     0.54%
 Total nonperforming
  assets/total assets     0.48%     0.44%     0.42%     0.51%     0.46%

 PROVISION AND
  ALLOWANCE FOR LOAN
  LOSSES
 Balance at beginning
  of period           $ 22,886  $ 22,581  $ 22,130  $ 22,116  $ 22,108
 Charged-off loans      (1,474)   (1,331)     (754)     (883)   (3,117)
 Recoveries on
  charged-off loans         96       386       100        72        65
 ----------------------------------------------------------------------
 Net loans charged-off  (1,378)     (945)     (654)     (811)   (3,052)
 Acquired allowance         --        --        --        --        --
 Provision for loan
  losses                 1,400     1,250     1,105       825     3,060
 ----------------------------------------------------------------------
 Balance at end of
  period              $ 22,908  $ 22,886  $ 22,581  $ 22,130  $ 22,116
 ----------------------------------------------------------------------

 Allowance for loan
  losses/nonperforming
  loans                    188%      221%      231%      182%      210%
 Allowance for loan
  losses/total loans      1.14%     1.15%     1.14%     1.14%     1.14%

 NET LOAN CHARGE-OFFS
 Residential 
  mortgages           $     --  $   (119) $     --  $    (24) $     --
 Commercial mortgages     (900)      (63)     (131)     (175)       --
 Commercial business
  loans                    (10)     (265)     (121)     (213)   (2,683)
 Indirect auto and
  installment loans       (468)     (498)     (402)     (339)     (319)
 Home equity                --        --        --       (60)      (50)
 ----------------------------------------------------------------------
 Total net            $ (1,378) $   (945) $   (654) $   (811) $ (3,052)
 ----------------------------------------------------------------------

 Net charge-offs
  (YTD annualized)/
  average loans           0.19%     0.16%     0.15%     0.17%     0.34%

 DELINQUENT LOANS /
  TOTAL LOANS
 30-89 Days delinquent    0.46%     0.45%     0.33%     0.41%     0.39%
 90 + Days delinquent
  and still accruing      0.05%     0.03%     0.04%     0.03%     0.04%
 ----------------------------------------------------------------------
 Total accruing
  delinquent loans        0.51%     0.48%     0.37%     0.44%     0.43%

 Nonaccruing loans        0.61%     0.52%     0.49%     0.63%     0.54%
 ----------------------------------------------------------------------
 Total delinquent
  loans                   1.12%     1.00%     0.86%     1.07%     0.97%
 ----------------------------------------------------------------------


              BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
                   SELECTED FINANCIAL HIGHLIGHTS
 ----------------------------------------------------------------------
                                At or for the Quarters Ended
 ----------------------------------------------------------------------
                      Dec. 31,  Sept. 30, June 30,  Mar. 31,  Dec. 31,
                        2008      2008      2008      2008      2007
 ----------------------------------------------------------------------
 PERFORMANCE RATIOS
  Core return on
   tangible assets        0.98%     1.03%     1.16%     1.24%     0.83%
  Return on total
   assets                 0.79      0.82      0.91      0.97      0.50
  Core return on
   tangible common
   equity                12.70     15.85     17.89     19.52     12.90
  Return on total
   common equity          5.62      6.26      6.89      7.38      3.74
  Net interest margin,
   fully taxable
   equivalent             3.41      3.48      3.45      3.41      3.38
  Core tangible
   non-interest income
   to tangible assets     1.04      1.21      1.47      1.64      1.23
  Non-interest income
   to assets              0.97      1.13      1.36      1.52      1.14
  Core tangible
   non-interest
   expense to tangible
   assets                 2.68      2.82      2.91      2.95      2.80
  Non-interest expense
   to assets              2.62      2.76      2.97      2.89      2.95
  Efficiency ratio       62.24     62.18     61.08     60.12     62.51

 YEAR-TO-DATE GROWTH
  Total loans                3%        3%        4%       (2)%       3%
  Total deposits            --         1        (1)       12         2
  Total revenues            21        29        21        19        23

 FINANCIAL DATA
  (In millions)
  Total assets        $  2,667  $  2,566  $  2,547  $  2,546  $  2,513
  Total loans            2,007     1,992     1,978     1,935     1,944
  Total intangible
   assets                  179       180       181       182       182
  Total deposits         1,830     1,837     1,811     1,880     1,823
  Total stockholders'
   equity                  408       333       330       329       327
  Total stockholders'
   common equity           368       333       330       329       327
  Total core income        5.2       5.3       5.7       6.0       3.8
  Total net income         5.2       5.3       5.7       6.0       3.1

 ASSET QUALITY RATIOS
  Net charge-offs
   (annualized)/
   average loans          0.27%     0.19%     0.13%     0.17%     0.34%
  Non-performing
   assets/total assets    0.48      0.44      0.42      0.51      0.45
  Loan loss allowance/
   total loans            1.14      1.15      1.14      1.14      1.14
  Loan loss allowance/
   nonperforming loans    1.88x     2.21x     2.31x     1.82x    2.10x

 PER SHARE DATA
  Core earnings,
   diluted            $   0.44  $   0.51  $   0.55  $   0.58  $   0.36
  Net earnings,
   diluted                0.44      0.51      0.55      0.58      0.29
  Tangible common book
   value                 15.47     14.58     14.36     13.97     13.82
  Total common book
   value                 30.07     31.71     31.78     31.38     31.15
  Market price at
   period end            30.86     32.00     23.65     25.19     26.00
  Dividends               0.16      0.16      0.16      0.15      0.15

 CAPITAL RATIOS
  Common stockholders'
   equity to total
   assets                13.82%    12.97%    12.96%    12.91%    13.00%
  Tangible common
   stockholders'
   equity to tangible
   assets                 7.62      6.41      6.30      6.19      6.22
  Stockholders' equity
   to total assets       15.32%    12.97%    12.96%    12.91%    13.00%
  Tangible
   stockholders'
   equity to tangible
   assets                 9.23      6.41      6.30      6.19      6.22

 ----------------------------------------------------------------------
 (1) Reconciliations of Non-GAAP financial measures, including all
     references to core and tangible amounts, appear on page F-9.
     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) The Dec. 31, 2007 total loan annualized year-to-date growth
     calculations exclude the acquired FAPB balances and $50 million
     in residential mortgage loans sold during September 07.
 (4) The Dec. 31, 2007  total deposit annualized year-to-date growth
     calculations both exclude the acquired FAPB balances, $22.7
     million in repurchase liabilities converted to deposit accounts,
     and $21 million in brokered time deposit run-off.


               BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
                           AVERAGE BALANCES
 --------------------------------------------------------------------
                                   Quarters Ended
 --------------------------------------------------------------------
                 Dec. 31,   Sept. 30,  June 30,   Mar. 31,   Dec. 31,
 (In thousands)    2008       2008       2008       2008       2007
 --------------------------------------------------------------------
 Assets
 Loans
 Residential
  mortgages    $  679,000 $  672,363 $  665,407 $  659,406 $  661,937
 Commercial
  mortgages       808,308    787,543    745,727    712,317    694,339
 Commercial
  business
  loans           185,434    192,065    196,962    201,433    203,539
 Consumer
  loans           343,894    346,068    354,321    369,659    381,401
 ---------------------------------------------------------------------
 Total loans    2,016,636  1,998,039  1,962,417  1,942,815  1,941,216



 Securities       304,466    266,720    260,046    254,561    254,847
 Short-term
  investments      15,345      4,384     12,633     16,498      4,526
 ---------------------------------------------------------------------
 Total
  earning
  assets        2,336,447  2,269,143  2,235,096  2,213,874  2,200,589
 Goodwill &
  other
  intangible
  assets          179,187    180,387    181,705    182,895    183,902
 Other assets     105,097    105,937    105,109    104,027    105,525
 ---------------------------------------------------------------------
 Total assets  $2,620,731 $2,555,467 $2,521,910 $2,500,796 $2,490,016
 ---------------------------------------------------------------------

 Liabilities and
  stockholders' equity
 Deposits
 NOW           $  196,326 $  193,192 $  202,747 $  208,275 $  207,671
 Money market     453,977    447,184    491,945    466,673    422,514
 Savings          220,565    221,746    212,680    210,310    212,760
 Time             746,913    734,195    705,305    715,026    749,785
 ---------------------------------------------------------------------
 Total
  interest-
  bearing
  deposits      1,617,781  1,596,317  1,612,677  1,600,284  1,592,730
 Borrowings
  and
  debentures      382,015    380,453    343,816    346,475    327,383
 ---------------------------------------------------------------------
 Total
  interest-
  bearing
  liabilities   1,999,796  1,976,770  1,956,493  1,946,759  1,920,113
 Non-interest
  -bearing
  demand
  deposits        229,175    232,762    221,471    217,355    225,507
 Other
  liabilities      17,566     10,804     10,780      7,079     11,267
 ---------------------------------------------------------------------
 Total
  liabilities   2,246,537  2,220,336  2,188,744  2,171,193  2,156,887

 Stock-
  holders'
  equity          374,194    335,131    333,166    329,603    333,129
 ---------------------------------------------------------------------
 Total
  liabilities
  and
  stock-
  holders'
  equity       $2,620,731 $2,555,467 $2,521,910 $2,500,796  $2,490,016
 ---------------------------------------------------------------------

 Supplementary data
 Total non-
  maturity
  deposits     $1,100,043 $1,094,884 $1,128,843 $1,102,613 $1,068,452
 Total
  deposits      1,846,956  1,829,079  1,834,148  1,817,639  1,818,237
 Fully
  taxable
  equivalent
  income adj.         532        532        532        492        541
 ---------------------------------------------------------------------

 (1)  Average balances for securities available-for-sale are based
      on amortized cost.


               BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
        AVERAGE YIELDS (Fully Taxable Equivalent - Annualized)
 ---------------------------------------------------------------------
                                        Quarters Ended
 ---------------------------------------------------------------------
                        Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31,
                          2008     2008     2008     2008     2007
 ---------------------------------------------------------------------

 Earning assets
 Loans
 Residential mortgages       5.64%   5.65%   5.66%   5.70%   5.54%
 Commercial mortgages        6.01    6.24    6.44    6.86    7.34
 Commercial business loans   5.99    6.41    6.57    7.55    7.68
 Consumer loans              5.46    5.86    6.02    6.58    6.91
 Total loans                 5.79    5.99    6.11    6.48    6.68
 Securities                  5.14    5.27    5.39    5.69    5.85
 Federal funds sold and
  short-term investments     0.54    1.45    1.78    2.24    5.25
 Total earning assets        5.67    5.89    6.00    6.36    6.56

 Funding liabilities
 Deposits
 NOW                         0.52    0.64    0.73    1.09    1.39
 Money Market                1.73    1.86    2.14    2.88    3.41
 Savings                     0.68    0.61    0.71    0.97    1.10
 Time                        3.54    3.76    4.08    4.43    4.65
 Total interest-bearing
  deposits                   2.27    2.41    2.62    3.09    3.42
 Borrowings and debentures   4.21    4.27    4.29    4.57    4.70
 Total interest-bearing
  liabilities                2.64    2.77    2.91    3.35    3.64

 Net interest spread         3.03    3.12    3.09    3.01    2.92
 Net interest margin         3.41    3.48    3.45    3.41    3.38

 Cost of funds               2.37    2.48    2.62    3.02    3.26
 Cost of deposits            1.99    2.10    2.31    2.72    3.00

 ---------------------------------------------------------------------
 (1) Average balances and yields for securities available-for-sale are
     based on amortized cost.
 (2) Cost of funds includes all deposits and borrowings.


               BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
            RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
 --------------------------------------------------------------------

                                At or for the Quarters Ended
 ----------------------------------------------------------------------
 (Dollars in              Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31,
   thousands)               2008     2008     2008     2008      2007
 ----------------------------------------------------------------------
 Net income               $ 5,206  $ 5,276  $ 5,713  $ 6,049  $ 3,073
 Adj: Loss (gain) on
  sale of securities,
  net                          --       (4)      26       --       --
 Plus: Other non-
  recurring expense            --       --      683       --    1,198
 Adj:  Income taxes            --        2     (701)      --     (468)
 ----------------------------------------------------------------------
 Core income           (A)  5,206    5,274    5,721    6,049    3,803
 Plus: Amort. of
  intangible assets           838      889    1,019    1,084    1,050
 ----------------------------------------------------------------------
 Tangible core
  income               (B)$ 6,044  $ 6,163  $ 6,740  $ 7,133  $ 4,853
 ----------------------------------------------------------------------
 Total non-interest
  income                  $ 6,377  $ 7,235  $ 8,511  $ 9,472  $ 7,069
 Adj: Loss (gain) on
  sale of securities,
  net                          --       (4)      26       --       --
 ----------------------------------------------------------------------
 Total core non-
  interest income      (C)  6,377    7,231    8,537    9,472    7,069
 Net interest income       19,470   19,329   18,647   18,294   18,218
 ----------------------------------------------------------------------
 Total core revenue    (D)$25,847  $26,560  $27,184  $27,766  $25,287
 ----------------------------------------------------------------------

 Total non-interest
  expense                 $17,256  $17,737  $18,632  $18,074  $18,393
 Less: Other non-
  recurring expense            --       --     (683)      --   (1,198)
 ----------------------------------------------------------------------
 Core non-interest
  expense              (E) 17,256   17,737   17,949   18,074   17,195
 Less: Amortization
  of intangible
  assets                     (838)    (889)  (1,019)  (1,084)  (1,050)
 ----------------------------------------------------------------------
 Total core tangible
  non-interest
  expense              (F)$16,418  $16,848  $ 16,930 $16,990  $16,145
 ----------------------------------------------------------------------


 (Dollars in
   millions, except
   per share data)
 Total average assets     $ 2,621  $ 2,555  $ 2,522  $ 2,501  $ 2,490
 Less:  Average
  intangible assets          (179)    (180)    (182)    (183)    (184)
 ----------------------------------------------------------------------
 Total average
  tangible assets      (G)$ 2,442  $ 2,375  $ 2,340  $ 2,318  $ 2,306
 ----------------------------------------------------------------------

 Total average
  stockholders'
  equity                  $   374  $   335  $   333  $   330  $   333
 Less:  Average
  intangible assets          (179)    (180)    (182)    (183)    (184)
 ----------------------------------------------------------------------

 Total average
  tangible stock-
  holders' equity             195      155      151      147      149
 Less: Preferred
  equity                       (6)      --       --       --       --
 ----------------------------------------------------------------------
 Total average
  tangible common
  stockholders'
  equity               (H)$   189  $   155  $   151  $   147  $   149
 ----------------------------------------------------------------------

 Total stockholders'
  equity, period-end      $   408  $   335  $   330  $   329  $   327
 Less: Intangible
  assets, period-end         (179)    (180)    (181)    (182)    (182)
 ----------------------------------------------------------------------
 Total tangible
  stockholders'
  equity, period-end          229      155      149      147      145
 Less: Preferred
  equity                      (40)      --       --       --       --
 ----------------------------------------------------------------------
 Total tangible
  common stock-
  holders' equity,
  period-end           (I)$   189  $   155  $   149  $   147  $   145
 ----------------------------------------------------------------------

 Total shares
  outstanding,
  period-end
  (thousands)          (J) 12,253   10,493   10,385   10,475   10,493
 Average diluted
  shares outstanding
  (thousands)          (K) 11,892   10,400   10,384   10,457   10,664

 Core earnings per
  share              (A/K)$  0.44  $  0.51  $  0.55  $  0.58  $  0.36
 Tangible book value
  per share          (I/J)$ 15.47  $ 14.58  $ 14.36  $ 13.97  $ 13.82

 Core return on
  tangible assets    (B/G)   0.98%    1.03%    1.16%    1.24%    0.84%
 Core return on
  tangible common
  equity             (B/H)  12.70    15.84    17.89    19.52    13.03
 Core tangible non-
  interest income to
  tang. assets       (C/G)   1.04     1.21     1.47     1.64     1.23
 Core tangible non-
  interest exp to
  tang. assets       (F/G)   2.68     2.82     2.91     2.95     2.80
 Efficiency ratio           62.24    62.18    61.08    60.12    62.63
 ----------------------------------------------------------------------
 (1) Efficiency ratio is computed by dividing total tangible core
     non-interest expense by the sum of total net interest income on
     a fully taxable equivalent basis and total core non-interest
     income. The Company uses this non-GAAP measure, which is used
     widely in the banking industry, 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.


               BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
            RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

                                                      For years ended
 --------------------------------------------------------------------
                                                          Dec. 31,
 (Dollars in thousands)                                2008     2007
 --------------------------------------------------------------------
 Net income                                          $22,244  $13,535
 Adj: Loss on sale of securities, net                     22      591
 Adj: Loss on prepayment of borrowings, net               --    1,180
 Adj: Loss on sale of loans, net                          --    1,991
 Plus: Other non-recurring expense                       683    2,956
 Adj:  Income taxes                                     (699)  (2,492)
 --------------------------------------------------------------------
 Core income                                      (A) 22,250   17,761
 Plus: Amort. of intangible assets                     3,830    3,058
 --------------------------------------------------------------------
 Tangible core income                             (B)$26,080  $20,819
 --------------------------------------------------------------------

 Total non-interest income                            31,595  $24,643
 Adj: Loss on sale of securities, net                     22      591
 Adj: Loss on prepayment of borrowings, net               --    1,180
 Adj: Loss on sale of loans, net                          --    1,991
 Total core non-interest income                   (C) 31,617   28,405
 Net interest income                                  75,740   63,925
 --------------------------------------------------------------------
 Total core revenue                               (D)107,357  $92,330
 --------------------------------------------------------------------

 Total non-interest expense                           71,699  $65,494
 Less:  Other non-recurring expense                     (683)  (2,956)
 --------------------------------------------------------------------

 Core non-interest expense                        (E) 71,016   62,538
 Less: Amortization of intangible assets              (3,830)  (3,058)
 --------------------------------------------------------------------
 Total core tangible non-interest expense         (F) 67,186  $59,480
 --------------------------------------------------------------------

 (Dollars in millions, except per share data)
 Total average assets                                $ 2,551  $ 2,262
 Less:  Average intangible assets                       (180)    (138)
 --------------------------------------------------------------------
 Total average tangible assets                    (G)$ 2,371  $ 2,124
 --------------------------------------------------------------------

 Total average stockholders' equity                  $   343  $   288
 Less:  Average intangible assets                       (180)    (138)
 --------------------------------------------------------------------
 Total average tangible stockholders' equity             163      150
 --------------------------------------------------------------------
 Less: Preferred equity                                   (1)      --
 --------------------------------------------------------------------
 Total average tangible common stockholders'
  equity                                          (H)$   162  $   150
 --------------------------------------------------------------------

 Total stockholders' equity, period-end              $   408  $   327
 Less:  Intangible assets, period-end                   (179)    (182)
 --------------------------------------------------------------------
 Total tangible stockholders' equity, period-end         229      145
 Less: Preferred equity                                  (40)      --
 --------------------------------------------------------------------
 Total tangible common stockholders' equity,
  period-end                                      (I)$   189  $   145
 --------------------------------------------------------------------

 Total shares outstanding, period-end
  (thousands)                                     (J) 12,253   10,493
 Average diluted shares outstanding (thousands)   (K) 10,791    9,370

 Core earnings per share                        (A/K)$  2.06  $  1.90
 Tangible book value per share                  (I/J)$ 15.47  $ 13.82

 Core return on tangible assets                 (B/G)   1.10%    0.98%
 Core return on tangible common equity          (B/H)  16.16    13.88
 Core tangible non-interest income to tang.
  assets                                        (C/G)   1.33     1.34
 Core tangible non-interest exp to tang. assets (F/G)   2.83     2.80
 Efficiency ratio                                      61.40    62.94
 --------------------------------------------------------------------
 (1) Efficiency ratio is computed by dividing total tangible core
     non-interest expense by the sum of total net interest income on a
     fully taxable equivalent basis and total core non-interest
     income. The Company uses this non-GAAP measure, which is used
     widely in the banking industry, to provide important information
     regarding its operational efficiency.

            

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