10-Q
Table of Contents

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended: September 30, 2015
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                    to                  
 
Commission File Number: 001-15781
  
BERKSHIRE HILLS BANCORP, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
04-3510455
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
24 North Street, Pittsfield, Massachusetts
 
01201
(Address of principal executive offices)
 
(Zip Code)
 
Registrant’s telephone number, including area code: (413) 443-5601
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ý  No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý  No o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one)
 
Large Accelerated Filer o        Accelerated Filer ý        Non-Accelerated Filer o     Smaller Reporting Company o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes o  No ý
 
The Registrant had 30,982,398 shares of common stock, par value $0.01 per share, outstanding as of November 4, 2015.
 


Table of Contents

BERKSHIRE HILLS BANCORP, INC.
FORM 10-Q
 
INDEX 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes to Consolidated Financial Statements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2

Table of Contents

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


3

Table of Contents

PART I
ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
 
 
September 30,
2015
 
December 31,
2014
(In thousands, except share data)
 
 
Assets
 
 

 
 

Cash and due from banks
 
$
50,716

 
$
54,179

Short-term investments
 
42,855

 
17,575

Total cash and cash equivalents
 
93,571

 
71,754

Trading security, at fair value
 
14,587

 
14,909

Securities available for sale, at fair value
 
1,175,630

 
1,091,818

Securities held to maturity (fair values of $136,102 and $44,997)
 
133,165

 
43,347

Federal Home Loan Bank stock and other restricted securities
 
73,069

 
55,720

Total securities
 
1,396,451

 
1,205,794

Loans held for sale
 
25,472

 
19,493

 
 
 
 
 
Residential mortgages
 
1,769,271

 
1,496,204

Commercial real estate
 
2,021,300

 
1,611,567

Commercial and industrial loans
 
1,065,325

 
804,366

Consumer loans
 
809,034

 
768,463

Total loans
 
5,664,930

 
4,680,600

Less: Allowance for loan losses
 
(38,180
)
 
(35,662
)
Net loans
 
5,626,750

 
4,644,938

Premises and equipment, net
 
86,809

 
87,279

Other real estate owned
 
2,487

 
2,049

Goodwill
 
324,958

 
264,742

Other intangible assets
 
11,586

 
11,528

Cash surrender value of bank-owned life insurance policies
 
124,278

 
104,588

Deferred tax assets, net
 
42,198

 
28,776

Other assets
 
69,928

 
61,090

Total assets
 
$
7,804,488

 
$
6,502,031

Liabilities
 
 

 
 

Demand deposits
 
$
1,001,777

 
$
869,302

NOW deposits
 
476,351

 
426,108

Money market deposits
 
1,485,392

 
1,407,179

Savings deposits
 
603,596

 
496,344

Time deposits
 
1,940,213

 
1,455,746

Total deposits
 
5,507,329

 
4,654,679

Short-term debt
 
1,095,300

 
900,900

Long-term Federal Home Loan Bank advances
 
116,513

 
61,676

Subordinated borrowings
 
89,798

 
89,747

Total borrowings
 
1,301,611

 
1,052,323

Other liabilities
 
113,980

 
85,742

Total liabilities
 
$
6,922,920

 
$
5,792,744

 
Stockholders’ equity
 
 

 
 

Common stock ($.01 par value; 50,000,000 shares authorized and 32,321,962 shares issued and 30,949,168 shares outstanding in 2015; 26,525,466 shares issued and 25,182,566 shares outstanding in 2014)
 
322

 
265

Additional paid-in capital
 
742,334

 
585,289

Unearned compensation
 
(7,094
)
 
(6,147
)
Retained earnings
 
173,769

 
156,446

Accumulated other comprehensive income
 
2,055

 
6,579

Treasury stock, at cost (1,203,863 shares in 2015 and 1,342,900 shares in 2014)
 
(29,818
)
 
(33,145
)
Total stockholders’ equity
 
881,568

 
709,287

Total liabilities and stockholders’ equity
 
$
7,804,488

 
$
6,502,031

 
The accompanying notes are an integral part of these consolidated financial statements.

4

Table of Contents

BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(In thousands, except per share data)
 
2015
 
2014
 
2015
 
2014
Interest and dividend income
 
 

 
 

 
 

 
 

Loans
 
$
56,343

 
$
43,958

 
$
152,292

 
$
128,761

Securities and other
 
9,109

 
8,098

 
26,314

 
24,265

Total interest and dividend income
 
65,452

 
52,056

 
178,606

 
153,026

Interest expense
 
 

 
 

 
 

 
 

Deposits
 
6,046

 
4,877

 
16,287

 
14,076

Borrowings
 
2,435

 
2,230

 
7,218

 
6,906

Total interest expense
 
8,481

 
7,107

 
23,505

 
20,982

Net interest income
 
56,971

 
44,949

 
155,101

 
132,044

Non-interest income
 
 

 
 

 
 

 
 

Loan related income
 
1,537

 
1,471

 
5,603

 
4,565

Mortgage banking income
 
693

 
994

 
3,492

 
2,057

Deposit related fees
 
6,549

 
6,449

 
18,668

 
18,498

Insurance commissions and fees
 
2,544

 
2,632

 
7,997

 
8,141

Wealth management fees
 
2,376

 
2,330

 
7,376

 
7,173

Total fee income
 
13,699

 
13,876

 
43,136

 
40,434

Other
 
(1,050
)
 
520

 
(3,563
)
 
1,446

Gain on sale of securities, net
 
49

 
245

 
2,467

 
482

Loss on termination of hedges
 

 

 

 
(8,792
)
Total non-interest income
 
12,698

 
14,641

 
42,040

 
33,570

Total net revenue
 
69,669

 
59,590

 
197,141

 
165,614

Provision for loan losses
 
4,240

 
3,685

 
12,295

 
11,070

Non-interest expense
 
 

 
 

 
 

 
 

Compensation and benefits
 
25,237

 
20,665

 
71,551

 
60,803

Occupancy and equipment
 
6,827

 
6,780

 
21,178

 
20,250

Technology and communications
 
4,645

 
3,484

 
12,328

 
11,062

Marketing and promotion
 
781

 
659

 
2,294

 
1,801

Professional services
 
1,053

 
830

 
3,700

 
3,006

FDIC premiums and assessments
 
1,157

 
1,163

 
3,429

 
3,201

Other real estate owned and foreclosures
 
298

 
13

 
800

 
569

Amortization of intangible assets
 
887

 
1,236

 
2,722

 
3,816

Acquisition, restructuring and conversion related expenses
 
3,361

 
238

 
16,493

 
6,729

Other
 
5,132

 
4,619

 
14,056

 
13,072

Total non-interest expense
 
49,378

 
39,687

 
148,551

 
124,309

 
 
 
 
 
 
 
 
 
Income before income taxes
 
16,051

 
16,218

 
36,295

 
30,235

Income tax expense
 
1,350

 
4,230

 
2,791

 
7,888

Net income
 
$
14,701

 
$
11,988

 
$
33,504

 
$
22,347

 
 
 
 
 
 
 
 
 
Earnings per share:
 
 

 
 

 
 

 
 

Basic
 
$
0.49

 
$
0.48

 
$
1.21

 
$
0.90

Diluted
 
$
0.49

 
$
0.48

 
$
1.20

 
$
0.90

 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 

 
 

 
 

 
 

Basic
 
29,893

 
24,747

 
27,685

 
24,721

Diluted
 
30,069

 
24,861

 
27,847

 
24,835

The accompanying notes are an integral part of these consolidated financial statements.

5

Table of Contents

BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(In thousands)
 
2015
 
2014
 
2015
 
2014
Net income
 
$
14,701

 
$
11,988

 
$
33,504

 
$
22,347

Other comprehensive income, before tax:
 
 

 
 

 
 

 
 

Changes in unrealized gain on securities available-for-sale
 
8,207

 
(3,858
)
 
1,474

 
13,275

Changes in unrealized loss on derivative hedges
 
(4,369
)
 
980

 
(7,486
)
 
2,246

Changes in unrealized gain on terminated swaps
 

 

 

 
3,237

Changes in unrealized loss on pension
 
65

 
(455
)
 
(1,402
)
 
(455
)
Income taxes related to other comprehensive income:
 
 

 
 

 
 
 
 

Changes in unrealized gain on securities available-for-sale
 
(3,186
)
 
1,477

 
(692
)
 
(5,004
)
Changes in unrealized loss on derivative hedges
 
1,761

 
(396
)
 
3,017

 
(906
)
Changes in unrealized gain on terminated swaps
 

 

 

 
(1,312
)
Changes in unrealized loss on pension
 
(26
)
 
184

 
565

 
184

Total other comprehensive income (loss)
 
2,452

 
(2,068
)
 
(4,524
)
 
11,265

Total comprehensive income
 
$
17,153

 
$
9,920

 
$
28,980

 
$
33,612

 
The accompanying notes are an integral part of these consolidated financial statements.


6

Table of Contents

BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
Additional
 
 
 
 
 
Accumulated
other
 
 
 
 
 
 
Common stock
 
paid-in
 
Unearned
 
Retained
 
comprehensive
 
Treasury
 
 
(In thousands)
 
Shares
 
Amount
 
capital
 
compensation
 
earnings
 
(loss) income
 
stock
 
Total
Balance at December 31, 2013
 
25,036

 
$
265

 
$
587,247

 
$
(5,563
)
 
$
141,958

 
$
(9,057
)
 
$
(36,788
)
 
$
678,062

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Net income
 

 

 

 

 
22,347

 

 

 
22,347

Other comprehensive income
 

 

 

 

 

 
11,265

 

 
11,265

Total comprehensive income
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
33,612

Cash dividends declared ($0.54 per share)
 

 

 

 

 
(13,694
)
 

 

 
(13,694
)
Treasury stock purchased
 
(100
)
 

 

 

 

 

 
(2,468
)
 
(2,468
)
Forfeited shares
 
(7
)
 

 
(6
)
 
176

 

 

 
(170
)
 

Exercise of stock options
 
89

 

 

 

 
(1,163
)
 

 
2,215

 
1,052

Restricted stock grants
 
175

 

 
(3
)
 
(4,319
)
 

 

 
4,322

 

Stock-based compensation
 

 

 
41

 
2,816

 

 

 

 
2,857

Net tax benefit related to stock-based compensation
 

 

 
(1,973
)
 

 

 

 

 
(1,973
)
Other, net
 
(20
)
 

 
(6
)
 

 

 

 
(505
)
 
(511
)
Balance at September 30, 2014
 
25,173

 
$
265

 
$
585,300

 
$
(6,890
)
 
$
149,448

 
$
2,208

 
$
(33,394
)
 
$
696,937

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2014
 
25,183

 
$
265

 
$
585,289

 
$
(6,147
)
 
$
156,446

 
$
6,579

 
$
(33,145
)
 
$
709,287

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Net income
 

 

 

 

 
33,504

 

 

 
33,504

Other comprehensive loss
 

 

 

 

 

 
(4,524
)
 

 
(4,524
)
Total comprehensive income
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
28,980

Acquisition of Hampden Bancorp, Inc. (1)
 
4,186

 
42

 
114,562

 

 
 
 
 
 

 
114,604

Acquisition of Firestone Financial
 
1,442

 
15

 
42,092

 

 

 
 
 
 
 
42,107

Cash dividends declared ($0.57 per share)
 

 

 

 

 
(16,016
)
 

 

 
(16,016
)
Treasury stock purchased
 

 

 

 

 

 

 

 

Forfeited shares
 
(19
)
 

 
42

 
479

 

 

 
(521
)
 

Exercise of stock options
 
11

 

 

 

 
(165
)
 

 
281

 
116

Restricted stock grants
 
182

 

 
316

 
(4,804
)
 

 

 
4,488

 

Stock-based compensation
 

 

 

 
3,378

 

 

 

 
3,378

Net tax benefit related to stock-based compensation
 

 

 
26

 

 

 

 

 
26

Other, net
 
(36
)
 

 
7

 

 

 

 
(921
)
 
(914
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at September 30, 2015
 
30,949

 
$
322

 
$
742,334

 
$
(7,094
)
 
$
173,769

 
$
2,055

 
$
(29,818
)
 
$
881,568

 
(1) The Company's common stock includes the elimination of $4.6 million (168,931 shares) of Berkshire Hills Bancorp stock held by a subsidiary.

The accompanying notes are an integral part of these consolidated financial statements.


7

Table of Contents

BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 
 
Nine Months Ended
September 30,
(In thousands)
 
2015
 
2014
Cash flows from operating activities:
 
 

 
 

Net income
 
$
33,504

 
$
22,347

Adjustments to reconcile net income to net cash provided by operating activities:
 
 

 
 

Provision for loan losses
 
12,295

 
11,070

Net amortization of securities
 
2,282

 
1,380

Change in unamortized net loan costs and premiums
 
(716
)
 
(2,260
)
Premises and equipment depreciation and amortization expense
 
6,443

 
6,127

Stock-based compensation expense
 
3,377

 
2,855

Accretion of purchase accounting entries, net
 
(6,383
)
 
(4,989
)
Amortization of other intangibles
 
2,722

 
3,816

Write down of other real estate owned
 
480

 
160

Excess tax loss from stock-based payment arrangements
 
(26
)
 
(101
)
Income from cash surrender value of bank-owned life insurance policies
 
(2,401
)
 
(2,219
)
Gain on sales of securities, net
 
(2,467
)
 
(482
)
Net (increase) in loans held for sale
 
(5,060
)
 
(13,251
)
Loss on disposition of assets
 
2,208

 
668

Loss on sale of real estate
 
240

 
148

Loss on termination of hedges
 

 
3,237

Amortization of interest in tax-advantaged projects
 
8,577

 
1,869

Net change in other
 
(4,236
)
 
(9,362
)
Net cash provided by operating activities
 
50,839

 
21,013

 
 
 
 
 
Cash flows from investing activities:
 
 

 
 

Net decrease in trading security
 
424

 
403

Proceeds from sales of securities available for sale
 
24,389

 
143,488

Proceeds from maturities, calls and prepayments of securities available for sale
 
143,489

 
102,425

Purchases of securities available for sale
 
(236,601
)
 
(524,809
)
Proceeds from maturities, calls and prepayments of securities held to maturity
 
6,889

 
3,761

Purchases of securities held to maturity
 
(62,074
)
 
(1,436
)
Net change in loans
 
(327,813
)
 
(374,616
)
Purchases of bank owned life insurance
 
554

 

Proceeds from sale of Federal Home Loan Bank stock
 
306

 
5,213

Purchase of Federal Home Loan Bank stock
 
(10,706
)
 
(9,576
)
Net investment in limited partnership tax credits
 
(2,500
)
 
(2,884
)
Proceeds from the sale of premises and equipment
 
1,932

 
2,315

Purchase of premises and equipment, net
 
(3,961
)
 
(6,224
)
Acquisitions, net of cash paid
 
74,324

 
423,416

Proceeds from sale of other real estate
 
1,705

 
1,571

Net cash used in investing activities
 
(389,643
)
 
(236,953
)
(continued)
 
 

 
 


8

Table of Contents

 
 
Nine Months Ended
September 30,
(In thousands)
 
2015
 
2014
Cash flows from financing activities:
 
 

 
 

Net increase (decrease) in deposits
 
393,762

 
249,507

Proceeds from Federal Home Loan Bank advances and other borrowings
 
6,441,300

 
4,722,052

Repayments of Federal Home Loan Bank advances and other borrowings
 
(6,458,567
)
 
(4,745,324
)
Purchase of treasury stock
 

 
(2,468
)
Exercise of stock options
 
116

 
1,052

Excess tax loss from stock-based payment arrangements
 
26

 
101

Common stock cash dividends paid
 
(16,016
)
 
(13,694
)
Net cash provided by financing activities
 
360,621

 
211,226

 
 
 
 
 
Net change in cash and cash equivalents
 
21,817

 
(4,714
)
 
 
 
 
 
Cash and cash equivalents at beginning of year
 
71,754

 
75,539

 
 
 
 
 
Cash and cash equivalents at end of year
 
$
93,571

 
$
70,825

 
 
 
 
 
Supplemental cash flow information:
 
 

 
 

Interest paid on deposits
 
$
15,833

 
$
13,901

Interest paid on borrowed funds
 
7,069

 
7,719

Income taxes paid, net
 
1,125

 
473

 
 
 
 
 
Acquisition of non-cash assets and liabilities:
 
 

 
 

Assets acquired
 
948,796

 
18,064

Liabilities assumed
 
(762,261
)
 
(441,550
)
 
 
 
 
 
Other non-cash changes:
 
 

 
 

Other net comprehensive income
 
(4,524
)
 
8,028

Real estate owned acquired in settlement of loans
 
2,747

 
3,975

 
 
 
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.



9

Table of Contents


NOTE 1.                                              BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and contain all adjustments, consisting solely of normal, recurring adjustments, necessary for a fair presentation of results for such periods.
In addition, these interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X, and accordingly, certain information and footnote disclosures normally included in financial statements prepared according to U.S. GAAP have been omitted.
The results for any interim period are not necessarily indicative of results for the full year. These consolidated financial statements should be read in conjunction with the audited financial statements and note disclosures for Berkshire Hills Bancorp, Inc. (the “Company”) previously filed with the Securities and Exchange Commission in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.
Reclassifications
Certain items in prior financial statements have been reclassified to conform to the current presentation.

Recently Adopted Accounting Standards
In January 2014, the Financial Accounting Standard Board “FASB” issued Accounting Standard Updated “ASU” ASU No. 2014-01, “Accounting for Investments in Qualified Affordable Housing Projects.” ASU No. 2014-01 permits reporting entities to make an accounting policy election to account for investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense. This new guidance also requires new disclosures for all investors in these projects. ASU No. 2014-01 is effective for interim and annual reporting periods beginning after December 15, 2014. Upon adoption, the guidance must be applied retrospectively to all periods presented. However, entities that use the effective yield method to account for investments in these projects before adoption may continue to do so for these pre-existing investments. The Company has elected not to adopt the proportional amortization method, which had no impact on our consolidated financial statements.

Also in January 2014, the FASB issued ASU No. 2014-04, “Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure.” The objective of this guidance is to clarify when an in substance repossession or foreclosure occurs, that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. ASU No. 2014-04 states that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, ASU No. 2014-04 requires interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. ASU No. 2014-04 is effective for interim and annual reporting periods beginning after December 15, 2014. The Company adopted the provisions of ASU No. 2014-04 effective January 1, 2015, which did not have a material effect on our consolidated financial statements. See Note 6. Loan Loss Allowance to the Consolidated Financial Statements for the disclosures required by ASU No. 2014-04.

In June 2014, the FASB issued ASU No. 2014-11 related to repurchase-to-maturity transactions, repurchase financing and disclosures. The pronouncement changes the accounting for repurchase-to-maturity transactions and linked repurchase financings to secured borrowing accounting, which is consistent with the accounting for other repurchase agreements. The pronouncement also requires two new disclosures. The first disclosure requires an entity to disclose information on transfers accounted for as sales in transactions that are economically similar to repurchase agreements. The second disclosure provides increased transparency about the types of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings. The pronouncement is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. Early adoption is not permitted. As of March 31, 2015, the Company did not have any repurchase transactions, and therefore the adoption of this pronouncement did not have an impact on our consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-14 related to classification of certain government-guaranteed mortgage loans upon foreclosure. The objective of this guidance is to reduce diversity in practice related to how creditors classify government-

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guaranteed mortgage loans, including FHA or VA guaranteed loans, upon foreclosure. Some creditors reclassify those loans to real estate consistent with other foreclosed loans that do not have guarantees; others reclassify the loans to other receivables. The amendments in this guidance require that a mortgage loan be derecognized and that a separate other receivable be recognized upon foreclosure if the following conditions are met: (1) The loan has a government guarantee that is not separable from the loan before foreclosure; (2) At the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on the guarantee, and the creditor has the ability to recover under that claim; and (3) At the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed. Upon foreclosure, the separate other receivable should be measured based on the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. The pronouncement is effective for interim and annual reporting periods beginning after December 15, 2014. The Company adopted the provisions of ASU No. 2014-14 effective January 1, 2015, which did not have a material effect on our consolidated financial statements.

Future Application of Accounting Pronouncements
In May 2014, the FASB issued ASU No. 2014-09 related to the recognition of revenue from contracts with customers. The new revenue pronouncement creates a single source of revenue guidance for all companies in all industries and is more principles-based than current revenue guidance. The pronouncement provides a five-step model for a company to recognize revenue when it transfers control of goods or services to customers at an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. The five steps are (1) identify the contract with the customer, (2) identify the separate performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the separate performance obligations and (5) recognize revenue when each performance obligation is satisfied. The standard is effective for public entities for interim and annual reporting periods beginning after December 15, 2016; early adoption is not permitted. However, in July 2015, the FASB voted to approve deferring the effective date by one year (i.e., interim and annual reporting periods beginning after December 15, 2017). Early adoption is permitted, but not before the original effective date (i.e., interim and annual reporting periods beginning after December 15, 2016). For financial reporting purposes, the standard allows for either full retrospective adoption, meaning the standard is applied to all of the periods presented, or modified retrospective adoption, meaning the standard is applied only to the most current period presented in the financial statements with the cumulative effect of initially applying the standard recognized at the date of initial application. The Company is currently evaluating the provisions of ASU No. 2014-09, and will be closely monitoring developments and additional guidance to determine the potential impact the new standard will have on our consolidated financial statements.

In February 2015, the FASB issued ASU No. 2015-02, “Amendments to the Consolidation Analysis.” This ASU affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. Specifically, the amendments: (1) Modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (“VIEs”) or voting interest entities; (2) Eliminate the presumption that a general partner should consolidate a limited partnership; (3) Affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships; and (4) Provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. ASU No. 2015-02 is effective for interim and annual reporting periods beginning after December 15, 2015. The adoption of this pronouncement is not expected to have a material impact on our consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-05, “Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.” This ASU provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The new guidance does not change the accounting for a customer’s accounting for service contracts. ASU No. 2015-05 is effective for interim and annual reporting periods beginning after December 15, 2015. The adoption of this pronouncement is not expected to have a material impact on our consolidated financial statements.

In September 2015, the FASB issued ASU No. 2015-16, “Business Combinations: Simplifying the Accounting for Measurement-Period Adjustments.” This ASU eliminates the requirement to retrospectively adjust the financial statements for measurement-period adjustments that occur in periods after a business combination is consummated. Measurement period adjustments are calculated as if they were known at the acquisition date, but are recognized in the reporting period in which they are determined. Additional disclosures are required about the impact on current-period income statement line items of adjustments that would have been recognized in prior periods if prior-period information had been revised. The guidance is effective for annual periods beginning after December 15, 2015 and is to be applied prospectively to adjustments of provisional amounts that occur after the effective date. Early application is permitted. The adoption of this pronouncement is not expected to have a material impact on our consolidated financial statements.

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NOTE 2.     ACQUISITION

Hampden Bancorp, Inc.
On April 17, 2015, the Company acquired all of the outstanding common shares of Hampden Bancorp, Inc. (“Hampden”). Hampden, as a holding company, had one banking subsidiary (“Hampden Bank”) that had ten branches primarily serving western Massachusetts. As a result of the transaction, Hampden merged into Berkshire Hills Bancorp, and Hampden Bank merged into Berkshire Bank. This business combination increases Berkshire’s market share in its franchise and the goodwill recognized results from the expected synergies and earnings accretion from this combination, including future cost savings related to Hampden’s operations.

On the acquisition date, Hampden had 5.167 million outstanding common shares, net of 209 thousand shares held by Berkshire Bank. Hampden shareholders received 4.186 million Berkshire common shares based on an exchange ratio of 0.81 shares of Berkshire common stock for each Hampden share. The merger qualifies as a reorganization for federal income tax purposes, and as a result, Hampden common shares exchanged for Berkshire common shares are transferred on a tax-free basis. The 4.355 million shares of Berkshire common stock issued in this exchange were valued at $27.38 per share based on the closing price of Berkshire posted on April 17, 2015. Excluding the 169 thousand shares issued to Berkshire Bank, this resulted in a consideration value of $114.6 million. The Hampden shares held by Berkshire Bank were valued at $4.6 million, and the value in excess of the carrying value was recorded as a $2.2 million non-recurring securities gain in the statement of income.

The results of Hampden’s operations are included in the Company's Consolidated Statement of Income from the date of acquisition. The assets and liabilities in the Hampden acquisition were recorded at their fair value based on management’s best estimate using information available as of the date of acquisition.  Consideration paid, and fair values of Hampden’s assets acquired and liabilities assumed, along with the resulting goodwill, are summarized in the following tables:
(in thousands)
As Acquired
Fair Value Adjustments
 
As Recorded at Acquisition
Consideration paid:
 
 
 
 
Berkshire Hills Bancorp common stock issued to Hampden common stockholders
 
$
114,604

Fair value of Hampden shares previously owned by the Company prior to acquisition
 
4,632

Total consideration paid
 
$
119,236

Recognized amounts of identifiable assets acquired and liabilities assumed, at fair value:
 
 
Cash and short-term investments
$
83,134

$

  
$
83,134

Investment securities
72,439

(224
)
(a)
72,215

Loans
501,870

(8,101
)
(b)
493,769

Premises and equipment
4,449

775

(c)
5,224

Core deposit intangibles

2,780

(d)
2,780

Deferred tax assets, net
3,875

3,091

(e)
6,966

Other assets
22,919

560

(f)
23,479

Deposits
(482,130
)
(1,439
)
(g)
(483,569
)
Borrowings
(117,135
)
(2,380
)
(h)
(119,515
)
Other liabilities
(8,395
)
(124
)
(i)
(8,519
)
Total identifiable net assets
$
81,026

$
(5,062
)
 
$
75,964

 
 
 
 
 
Goodwill
 
 
 
$
43,272


Explanation of Certain Fair Value Adjustments
(a)
The adjustment represents the write down of the book value of investments to their estimated fair value based on fair values on the date of acquisition.
(b)
The adjustment represents the write down of the book value of loans to their estimated fair value based on current interest rates and expected cash flows, which includes an estimate of expected loan loss inherent in the portfolio. Loans that met the criteria and are being accounted for in accordance with ASC 310-30 had a book value of $28.5 million and have a fair value $16.7 million. Non-impaired loans accounted for under ASC 310-10 had a book value of $473.4 million and have a fair value of $477.1 million. ASC 310-30 loans have a $4.0 million fair value adjustment discount that is accretable in earnings over an estimated five year life using the effective yield as determined on the

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date of acquisition.  The effective yield is periodically adjusted for changes in expected cash flows.  ASC 310-10 loans have a $0.4 million fair value adjustment premium that is amortized into expense over the remaining term of the loans using the effective interest method, or a straight-line method if the loan is a revolving credit facility.   
(c)  The amount represents the adjustment of the book value of buildings and equipment, to their estimated fair value based on appraisals and other methods. The adjustments will be depreciated over the estimated economic lives of the assets.
(d) The adjustment represents the value of the core deposit base assumed in the acquisition.  The core deposit asset was recorded as an identifiable intangible asset and will be amortized using a straight-line method over the average life of the deposit base, which is estimated to be nine years.
(e)   Represents net deferred tax assets resulting from the fair value adjustments related to the acquired assets and liabilities, identifiable intangibles, and other purchase accounting adjustments.
(f)
The amount consists of a $0.2 million fair value adjustment to write-down other real estate owned based on market report data, a $0.3 million write-down of mortgage servicing assets acquired based on valuation reports, a $0.5 million write-off of prepaid assets due to obsolescence, and a $1.6 million measurement period adjustment increase to current taxes receivable. These adjustments are not accretable into earnings in the statement of income.  
(g) The adjustment is necessary because the weighted average interest rate of time deposits exceeded the cost of similar funding at the time of acquisition. The amount will be amortized using an accelerated method over the estimated useful life of two years.
(h)  Adjusts borrowings to their estimated fair value, which is calculated based on the amount of prepayment penalties that would be incurred if the borrowings were exited with the Federal Home Loan Bank of Boston on the date of acquisition.
(i)   Adjusts the book value of other liabilities to their estimated fair value at the acquisition date. The adjustment consists of a $0.4 million write-off of deferred revenue, a $0.3 million increase to post-retirement liabilities due to change-in-control provisions, and a $0.2 million increase related to non-level leases.

Except for collateral dependent loans with deteriorated credit quality, the fair values for loans acquired were estimated using cash flow projections based on the remaining maturity and repricing terms.  Cash flows were adjusted by estimating future credit losses and the rate of prepayments.  Projected monthly cash flows were then discounted to present value using a risk-adjusted market rate for similar loans.  For collateral dependent loans with deteriorated credit quality, to estimate the fair value we analyzed the value of the underlying collateral of the loans, assuming the fair values of the loans were derived from the eventual sale of the collateral.  Those values were discounted using market derived rates of return, with consideration given to the period of time and costs associated with the foreclosure and disposition of the collateral.  There was no carryover of the seller’s allowance for credit losses associated with the loans that were acquired in the acquisition as the loans were initially recorded at fair value.

Information about the acquired loan portfolio subject to ASC 310-30 as of April 17, 2015 is, as follows (in thousands):
 
ASC 310-30 Loans
Gross contractual receivable amounts at acquisition
$
28,505

Contractual cash flows not expected to be collected (nonaccretable discount)
(7,884
)
Expected cash flows at acquisition
20,621

Interest component of expected cash flows (accretable discount)
(3,950
)
Fair value of acquired loans
$
16,671

 
The goodwill, which is not amortized for book purposes, was assigned to our banking segment and is not deductible for tax purposes. The fair value of savings and transaction deposit accounts acquired in the Hampden acquisition was assumed to approximate the carrying value as these accounts have no stated maturity and are payable on demand.  The fair value of time deposits was estimated by discounting the contractual future cash flows using market rates offered for time deposits of similar remaining maturities.

Direct acquisition and integration costs of the Hampden acquisition were expensed as incurred, and totaled $9.6 million during the nine months ending September 30, 2015 and there were $0 million for the same period of 2014.






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Firestone Financial Corp.
On August 7, 2015, the Company acquired all of the outstanding common shares of Firestone Financial Corp. (“Firestone”). Firestone is located in Needham, Massachusetts and is engaged in providing equipment financing for amusement, vending, laundry, and fitness industries nationwide. Firestone continues to operate as a wholly-owned subsidiary of Berkshire Bank. This business combination increases Berkshire’s market share in its franchise and the goodwill recognized results from the expected synergies and earnings accretion from this combination, including future cost savings related to Firestone’s operations.

Based on the merger agreement, Firestone shareholders received 1.442 million shares of Berkshire common stock and $13.4 million in cash. The 1.442 million shares of Berkshire common stock issued for this transaction was valued at $29.20 per share based on the closing price of Berkshire posted on August 7, 2015, resulting in a stock consideration value of $42.1 million. Additionally, the Company extinguished Firestone’s $11.8 million commercial loan from Berkshire Bank, resulting in a $67.3 million total consideration paid for the acquisition of Firestone.

The results of Firestone’s operations are included in the Company's Consolidated Statement of Income from the date of acquisition. The assets and liabilities in the Firestone acquisition were recorded at their fair value based on management’s best estimate using information available as of the date of acquisition. Consideration paid, and fair values of Firestone’s assets acquired and liabilities assumed, along with the resulting goodwill, are summarized in the following table:
 
 
Fair Value
 
As Recorded at
(in thousands)
As Acquired
Adjustments
 
Acquisition
Consideration paid:
 
 
 
 
Berkshire Hills Bancorp common stock issued to Firestone common stockholders
 
$
42,107

Cash paid to Firestone common stockholders
 
13,387

Total merger consideration (1)
 
$
55,494

 
 
Recognized amounts of identifiable assets acquired and liabilities assumed, at fair value:
 
Cash and short-term investments
4,577


 
4,577

Loans
194,622

(2,668
)
(a)
191,954

Premises and equipment
1,356

(835
)
(b)
521

Deferred tax assets, net
162

2,850

(c)
3,012

Other assets
1,863

(1,002
)
(d)
861

Borrowings (1)
(159,312
)


 
(159,312
)
Other liabilities
(3,198
)
76

(e)
(3,122
)
Total identifiable net assets
40,070

(1,579
)
 
38,491

 
 
 
 
 
Goodwill
 
 
 
$
17,003

(1) Amounts exclude $11.8 million of Firestone's commercial loan with the Company, which was effectively settled upon acquisition.

Explanation of Certain Fair Value Adjustments
(a) The adjustment represents a write-down of the book value of loans to their estimated fair value based on current
interest rates and expected cash flows, which includes an estimate of expected loan loss inherent in the portfolio. Loans that met the criteria and are being accounted for in accordance with ASC 310-30 had a book value of $5.4 million and have a fair value $1.5 million. Non-impaired loans accounted for under ASC 310-10 had a book value of $192.7 million and have a fair value of $190.4 million. ASC 310-30 loans have a $0.8 million fair value adjustment discount that is accretable in earnings over an estimated three year life using the effective yield as determined on the date of acquisition. The effective yield is periodically adjusted for changes in expected cash flows. ASC 310-10 loans have a $2.3 million fair value adjustment discount that is amortized into earnings over the remaining term of the loans using the effective interest method.
(b) The adjustment is a write-off of capitalized costs associated with Firestone’s internally developed accounting
software, the development of which has been ceased due to pending conversion of Firestone’s accounting system to the Company’s existing system.
(c) Represents net deferred tax assets resulting from the fair value adjustments related to the acquired assets and

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liabilities, identifiable intangibles, and other purchase accounting adjustments.
(d) The adjustment consists of a $0.8 million write-off of capitalized loan costs due to no future economic benefits, a
$117 thousand write-off of equipment held for sale due to an estimated zero resale value, and a $75 thousand swap termination fee for prepayment of Firestone’s borrowings.
(e) The adjustment is a write-off of a deferred rent accrual.

The method to determine the fair value of the loans acquired from Firestone was consistent with the method used in the Hampden acquisition. Accordingly, there was no carryover of Firestone’s allowance for credit losses associated with the loans that were acquired as the loans were initially recorded at fair value.

Information about the acquired loan portfolio subject to ASC 310-30 as of August 7, 2015 is as follows (in thousands):
 
ASC 310-30 Loans
Gross contractual receivable amounts at acquisition
$
5,369

Contractual cash flows not expected to be collected (nonaccretable discount)
(3,000
)
Expected cash flows at acquisition
2,369

Interest component of expected cash flows (accretable discount)
(827
)
Fair value of acquired loans
$
1,542

The goodwill, which is not amortized for book purposes, was assigned to our banking segment and is not deductible for tax purposes.
  
Direct acquisition and integration costs of the Firestone acquisition were expensed as incurred, and totaled $1.5 million during the nine months ending September 30, 2015 and there were none for the same period of 2014.

Pro Forma Information (unaudited)
The following table presents selected unaudited pro forma financial information reflecting the acquisitions of Hampden and Firestone assuming these acquisitions were completed as of January 1, 2014. The unaudited pro forma financial information includes adjustments for scheduled amortization and accretion of fair value adjustments recorded at the time of the acquisitions. These adjustments would have been different if they had been recorded on January 1, 2014, and they do not include the impact of prepayments. The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the combined financial results of the Company, Hampden, and Firestone had the transaction actually been completed at the beginning of the periods presented, nor does it indicate future results for any other interim or full-year period. Pro forma basic and diluted earnings per common share were calculated using Berkshire’s actual weighted-average shares outstanding for the periods presented plus the 5.63 million shares issued as a result of Hampden and Firestone acquisitions. The unaudited pro forma information is based on the actual financial statements of Berkshire, Hampden, and Firestone for the periods shown until the dates of acquisitions, at which time the Hampden and Firestone operations became included in Berkshire’s financial statements.

The unaudited pro forma information, for the nine months ended September 30, 2015 and 2014, set forth below reflects adjustments related to (a) amortization and accretion of purchase accounting fair value adjustments; (b) amortization of core deposit intangible; and (c) an estimated tax rate of 40.3 percent. Direct acquisition expenses incurred by Berkshire during 2015 as noted above, and $7.7 million and $1.5 million recorded by Hampden and Firestone, respectively, are reversed for the purposes of this unaudited pro forma information. Also excluded during 2015, was a $2.2 million gain on Hampden stock that was held by Berkshire at the time of acquisition. Furthermore, the unaudited pro forma information does not reflect management’s estimate of any revenue-enhancing or anticipated cost-savings that could occur after September 30, 2015.


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Information in the following table is shown in thousands, except earnings per share:
 
Pro Forma (unaudited)
 
Nine Months Ended September 30,
 
2015
2014
 
 
 
Net interest income
$
171,485

$
161,316

Non-interest income
41,490

36,455

Net income
41,341

31,079

 
 
 
Pro forma earnings per share:
 
 
Basic
$
1.36

$
1.02

Diluted
$
1.35

$
1.02


The Company has determined it is impractical to report the amounts of revenue and earnings of the acquired entities since the acquisition dates. Due to the integration of their operations with those of the organization, the Company does not record revenue and earnings separately for these operations. The revenue and earnings of these operations are included in the consolidated statement of income.



NOTE 3.                                              TRADING SECURITY
The Company holds a tax advantaged economic development bond that is being accounted for at fair value. The security had an amortized cost of $12.1 million and $12.6 million, and a fair value of $14.6 million and $14.9 million, at September 30, 2015 and December 31, 2014, respectively. As discussed further in Note 13 - Derivative Financial Instruments and Hedging Activities, the Company has entered into a swap contract to swap-out the fixed rate of the security in exchange for a variable rate. The Company does not purchase securities with the intent of selling them in the near term, and there are no other securities in the trading portfolio at September 30, 2015.

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NOTE 4. SECURITIES AVAILABLE FOR SALE AND HELD TO MATURITY
The following is a summary of securities available for sale and held to maturity:
(In thousands)
 
Amortized Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair Value
September 30, 2015
 
 

 
 

 
 

 
 

Securities available for sale
 
 

 
 

 
 

 
 

Debt securities:
 
 

 
 

 
 

 
 

Municipal bonds and obligations
 
$
98,790

 
$
3,988

 
$
(552
)
 
$
102,226

Government-guaranteed residential mortgage-backed securities
 
68,785

 
748

 
(113
)
 
69,420

Government-sponsored residential mortgage-backed securities
 
893,307

 
12,317

 
(1,788
)
 
903,836

Corporate bonds
 
51,996

 
268

 
(2,345
)
 
49,919

Trust preferred securities
 
11,730

 
385

 

 
12,115

Other bonds and obligations
 
3,189

 
8

 

 
3,197

Total debt securities
 
1,127,797

 
17,714

 
(4,798
)
 
1,140,713

Marketable equity securities
 
31,345

 
5,252

 
(1,680
)
 
34,917

Total securities available for sale
 
1,159,142

 
22,966

 
(6,478
)
 
1,175,630

 
 
 
 
 
 
 
 
 
Securities held to maturity
 
 

 
 

 
 

 
 

Municipal bonds and obligations
 
95,833

 
1,897

 
(306
)
 
97,424

Government-sponsored residential mortgage-backed securities
 
68

 
4

 

 
72

Tax advantaged economic development bonds
 
36,934

 
1,342

 

 
38,276

Other bonds and obligations
 
330

 

 

 
330

Total securities held to maturity
 
133,165

 
3,243

 
(306
)
 
136,102

 
 
 
 
 
 
 
 
 
Total
 
$
1,292,307

 
$
26,209

 
$
(6,784
)
 
$
1,311,732

 
 
 
 
 
 
 
 
 
December 31, 2014
 
 

 
 

 
 

 
 

Securities available for sale
 
 

 
 

 
 

 
 

Debt securities:
 
 

 
 

 
 

 
 

Municipal bonds and obligations
 
$
127,014

 
$
6,859

 
$
(174
)
 
$
133,699

Government-guaranteed residential mortgage-backed securities
 
68,972

 
702

 
(206
)
 
69,468

Government-sponsored residential mortgage-backed securities
 
755,893

 
7,421

 
(3,130
)
 
760,184

Corporate bonds
 
55,134

 
120

 
(1,103
)
 
54,151

Trust preferred securities
 
16,607

 
820

 
(1,212
)
 
16,215

Other bonds and obligations
 
3,211

 

 
(52
)
 
3,159

Total debt securities
 
1,026,831

 
15,922

 
(5,877
)
 
1,036,876

Marketable equity securities
 
48,993

 
7,322

 
(1,373
)
 
54,942

Total securities available for sale
 
1,075,824

 
23,244

 
(7,250
)
 
1,091,818

 
 
 
 
 
 
 
 
 
Securities held to maturity
 
 

 
 

 
 

 
 

Municipal bonds and obligations
 
4,997

 

 

 
4,997

Government-sponsored residential mortgage-backed securities
 
70

 
4

 

 
74

Tax advantaged economic development bonds
 
37,948

 
1,680

 
(34
)
 
39,594

Other bonds and obligations
 
332

 

 

 
332

Total securities held to maturity
 
43,347

 
1,684

 
(34
)
 
44,997

 
 
 
 
 
 
 
 
 
Total
 
$
1,119,171

 
$
24,928

 
$
(7,284
)
 
$
1,136,815


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The amortized cost and estimated fair value of available for sale (“AFS”) and held to maturity (“HTM”) securities, segregated by contractual maturity at September 30, 2015 are presented below.  Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations.  Mortgage-backed securities are shown in total, as their maturities are highly variable.  Equity securities have no maturity and are also shown in total.
 
 
Available for sale
 
Held to maturity
 
 
Amortized
 
Fair
 
Amortized
 
Fair
(In thousands)
 
Cost
 
Value
 
Cost
 
Value
 
 
 
 
 
 
 
 
 
Within 1 year
 
$

 
$

 
$
4,404

 
$
4,404

Over 1 year to 5 years
 
3,455

 
3,472

 
17,831

 
18,542

Over 5 years to 10 years
 
58,026

 
56,329

 
13,312

 
13,548

Over 10 years
 
104,224

 
107,656

 
97,550

 
99,536

Total bonds and obligations
 
165,705

 
167,457

 
133,097

 
136,030

 
 
 
 
 
 
 
 
 
Marketable equity securities
 
31,345

 
34,917

 

 

Residential mortgage-backed securities
 
962,092

 
973,256

 
68

 
72

Total
 
$
1,159,142

 
$
1,175,630

 
$
133,165

 
$
136,102


Securities with unrealized losses, segregated by the duration of their continuous unrealized loss positions, are summarized as follows:
 
 
Less Than Twelve Months
 
Over Twelve Months
 
Total
 
 
Gross
 
 
 
Gross
 
 
 
Gross
 
 
 
 
Unrealized
 
Fair
 
Unrealized
 
Fair
 
Unrealized
 
Fair
(In thousands)
 
Losses
 
Value
 
Losses
 
Value
 
Losses
 
Value
September 30, 2015
 
 

 
 

 
 

 
 

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
Securities available for sale
 
 

 
 

 
 

 
 

 
 

 
 

Debt securities:
 
 

 
 

 
 

 
 

 
 

 
 

Municipal bonds and obligations
 
$
291

 
$
14,940

 
$
261

 
$
6,982

 
$
552

 
$
21,922

Government-guaranteed residential mortgage-backed securities
 
25

 
2,624

 
88

 
8,697

 
113

 
11,321

Government-sponsored residential mortgage-backed securities
 
363

 
116,232

 
1,425

 
138,261

 
1,788

 
254,493

Corporate bonds
 
2,345

 
35,085

 

 

 
2,345

 
35,085

Trust preferred securities
 

 

 

 

 

 

Other bonds and obligations
 

 
138

 

 
42

 

 
180

Total debt securities
 
3,024

 
169,019

 
1,774

 
153,982

 
4,798

 
323,001

 
 
 
 
 
 
 
 
 
 
 
 
 
Marketable equity securities
 
395

 
2,745

 
1,285

 
9,509

 
1,680

 
12,254

Total securities available for sale
 
3,419

 
171,764

 
3,059

 
163,491

 
6,478

 
335,255

 
 
 
 
 
 
 
 
 
 
 
 
 
Securities held to maturity
 
 

 
 

 
 

 
 

 
 

 
 

Municipal bonds and obligations
 
231

 
20,149

 
75

 
2,933

 
306

 
23,082

Tax advantaged economic development bonds