Berkshire Hills Reports Growth in Second Quarter EPS to $0.52, Earnings from Continuing Operations Increased 8%, Quarterly Dividend Increased by 7% to 15 Cents Per Share

Berkshire Hills Bancorp, Inc. (NASDAQ:BHLB) reported second quarter 2007 net income of $4.6 million ($0.52 per diluted share) compared to $4.5 million ($0.51 per diluted share) in 2006. Second quarter net income from continuing operations increased by 8% to $4.6 million in 2007 from $4.2 million in 2006. Second quarter results in 2007 included $0.5 million in higher costs related to the New York de novo branch program, and revenues in 2006 were reduced by $0.4 million due to a one-time delay in the Federal Home Loan Bank (FHLB) dividend.

For the first half of the year, Berkshire reported 2007 net income of $9.5 million ($1.07 per diluted share) compared to $9.3 million ($1.06 per diluted share) in 2006. First half 2007 earnings included after-tax charges of $1.1 million ($0.12 per diluted share) related to Berkshire’s ten branch de novo program in the New York region. After-tax de novo branch program charges totaled $0.4 million ($0.05 per diluted share) in the first half of 2006.

Recent highlights include the following (income comparisons are to prior year, balance sheet comparisons are to prior quarter):

• Announced agreement to acquire Factory Point Bancorp in Manchester Center, Vermont
• Announced planned 7% increase in quarterly cash dividend to 15 cents per share
• 552% increase in insurance commissions and fees
• 28% increase in deposit and wealth management fees
• 18% annualized growth in average demand deposits
• 7% annualized growth in average loans, with 10% growth in average commercial loans
• The new credit commitment pipeline rose to a record quarter-end level of $127 million
• 7% annualized growth in average deposits excluding planned runoff of brokered time deposits; 5% annualized growth in total average deposits;
• Nonperforming assets were 0.42% of assets at quarter-end
• Annualized net charge-offs were 0.14% of average loans for the quarter
• Opened the tenth New York region branch, in the town of Glenville

Michael P. Daly, President and Chief Executive Officer, stated, “Berkshire produced a 19% increase in second quarter revenues, which led to an 8% increase in earnings from continuing operations and higher earnings per share, which totaled $0.52 for the quarter. Non-interest income rose to 31% of revenue, primarily due to the benefit from our recent insurance agency acquisitions. Our diversified fee income growth has more than offset the ongoing impact of tighter interest margins, which we had anticipated. Growth in average loans and deposits continued in the second quarter, benefiting from our new branding as “America’s Most Exciting BankSM”. We have also opened four new branches this year in our New York region. Reflecting the momentum of our franchise growth, I am pleased to announce a 7% increase in the quarterly cash dividend to stockholders.”

Mr. Daly continued, “Our most exciting news in the second quarter was the announcement of our merger agreement with Factory Point Bancorp of Manchester Center, Vermont. We are progressing well with our plan to complete this acquisition within another three months, subject to the receipt of all stockholder and regulatory approvals. The addition of these seven branches in the attractive Southern Vermont market will bring our total branch count to 38, and our total office count to 48 including our 10 insurance offices. This is an increase from 11 offices just a little more than two years ago and results from our balanced approach to acquisitions along with organic and de novo growth. While the costs of our de novo New York branch region constrain our current earnings growth, we view this as a valuable investment in our franchise in New York’s growing Capital region and Tech Valley.”

Mr. Daly concluded, “Our loan performance has remained good. Berkshire does not engage in subprime lending programs and does not purchase investment securities backed by subprime mortgages. We manage our risk profile to maintain a high quality loan portfolio in order to support steady long run earnings growth. Our continuing long run performance was recognized by the Boston Globe in May when, for the seventh year in a row, Berkshire was recognized as one of the 100 top performing Massachusetts-based public companies.”

DIVIDEND INCREASE

The Board of Directors declared a 7% increase in the quarterly cash dividend to $0.15 per share from $0.14 per share. The dividend will be distributed to stockholders of record at the close of business on August 6, 2007, and payable on or about August 20, 2007.

FINANCIAL CONDITION

Total average assets increased at a 6% annualized rate in the second quarter, compared to the linked quarter. Near the end of the second quarter, the Company reduced its commercial business loans by $23 million due to the outplacement of certain balances which had grown to require fully monitored asset based lending which is outside of the Company’s current risk management parameters. Due to this decrease at quarter-end, there was no significant change in total period-end assets or loans compared to the prior quarter-end. The change in loan composition also contributed to the lower loan loss provision during the quarter. Despite this outplacement, Berkshire produced 10% annualized growth in average commercial loans. Berkshire’s commitments for new credit originations more than doubled during the quarter, climbing to a record quarter-end total of $127 million as of June 30, 2007.

Asset quality remained well controlled during the quarter. Berkshire does not offer subprime lending programs. The average FICO scores on its consumer auto loans have increased in each of the last four quarters, reaching an average of 730 in the most recent quarter. The annualized rate of net loan charge-offs was 0.14% during the quarter. There was no significant increase in total nonperforming assets during the quarter. Nonperforming assets measured 0.42% of total assets at quarter-end. Nonperforming assets totaled $9.1 million, and included one $6.0 million commercial relationship which has an improving outlook based on recent developments. All other nonperforming assets were 0.14% of total assets, and accruing delinquent loans were 0.36% of total loans at quarter-end. The loan loss allowance measured 1.11% of total loans at mid-year, compared to 1.14% at the start of the year. This change included the impact of the previously noted outplacement of commercial business loans, which had a higher allowance component. The Company had no foreclosed real estate at mid-year.

Average deposits increased at a 7% annualized rate during the second quarter, excluding planned runoff of brokered time deposits assumed in the Woronoco acquisition. Total average deposits increased at a 5% annualized rate. Towards the middle of the quarter, the Company changed its time account pricing strategy and as a result, time accounts and total deposits declined at quarter-end compared to the prior quarter. Reflecting these pricing changes, the increase in the cost of deposits in the quarter was the lowest it has been in the last four quarters. Total average demand deposit balances increased at an 18% annualized rate during the second quarter, reflecting Berkshire’s promotional emphasis on these lower-cost transaction accounts with the highest cross sales potential.

Quarter-end stockholders’ equity increased by $3 million (5% annualized) to $266 million due primarily to the benefit of retained earnings. Tangible book value per share increased at a 7% annualized rate to $16.40, while total book value per share increased at a 3% annualized rate to $30.12. The ratio of tangible equity to assets increased during the most recent quarter to 7.1% from 6.9%, while the ratio of total equity to assets increased to 12.3% from 12.1%.

RESULTS OF OPERATIONS

Second quarter net income from continuing operations increased by 8% to $4.6 million in 2007 from $4.2 million in 2006. Second quarter results in 2007 included $0.5 million in higher costs related to the New York de novo branch program. Net income in the second quarter of 2006 included $0.2 million in net income from discontinued operations representing contingency payments received from the sale of Berkshire’s technology subsidiary in 2005. Second quarter revenues in 2006 were reduced by $0.4 million due to a delay in the FHLB dividend, which was not received until the third quarter of 2006.

Total second quarter net revenue increased year-to-year by $3.6 million (19%), including a $0.6 million increase in net interest income and a $3.0 million increase in non-interest income. Berkshire recorded a $3.2 million increase in insurance fee income due to the acquisition of five insurance agencies in the fourth quarter of 2006.

Adjusting for the delayed FHLB dividend, second quarter net interest income increased by $0.2 million (1%) in 2007 compared to 2006. The net interest margin decreased to 3.15% from 3.16% in the second quarter of 2006 and from 3.24% in the first quarter of 2007. Average earning assets increased at a 7% annualized rate compared to the linked quarter, which partially offset the impact of margin compression. The benefit from the higher loan commitment pipeline and from deposit pricing changes is expected to contribute to net interest income in the second half of the year. The Company is also promoting lower-cost transaction accounts to help offset margin pressures and to provide increased cross-selling opportunities.

Total second quarter fee income increased by $3.7 million (130%) in 2007 compared to 2006. This included a 552% increase in insurance fees. The 29% increase in deposit fees was primarily related to overdraft income. Wealth management fees increased by 25%, and total assets under management increased at a 27% annualized rate in the second quarter to $544 million at mid-year 2007. The revenues from Berkshire’s acquired insurance agencies have a seasonal component and are typically higher in the first and second quarters of the year. Second quarter non-interest income in 2006 included $529 thousand in net gains on the sale of securities; there were no securities gains recorded in the most recent quarter.

The second quarter provision for loan losses was $100 thousand in 2007 compared to $600 thousand in 2006. For the first six months, the provision was $850 thousand in 2007 compared to $890 thousand in 2006. The provision for the most recent quarter included the impact of the outplacement of certain commercial loan balances and the change in loan composition as previously discussed.

Second quarter non-interest expense increased year-to-year by $3.5 million (30%). This increase included $2.1 million related to acquired insurance operations and $0.5 million related to growth in the New York de novo branch program. The remaining $0.9 million increase represented an 8% increase related to other increased staff and general costs of the Company’s expansion. The effective tax rate in 2007 was 32% compared to 31% and 32% in the second quarter and first half of 2006, respectively.

CONFERENCE CALL

The Company will conduct a conference call at 10:00 A.M. eastern time on Monday, July 30, 2007. President and Chief Executive Officer Michael P. Daly and Interim Chief Financial Officer John S. Millet will discuss highlights of the Company's second quarter financial results, along with guidance about expected financial results. Information about the conference call follows:

Dial-in:                1-877-407-8035
Replay Dial-in:         1-877-660-6853
Replay Access Codes:    Account #286; Conference ID #247653
                        (Both are needed to access the replay)

Replay Dates:           July 30, 2007 at 1:00 P.M. (ET) through
                        August 13, 2007 at 11:59 P.M. (ET)

All interested parties are welcome to access the conference call and are requested to call in a few minutes prior to 10:00 A.M. (ET) to register for the event. After the presentation by Messrs. Daly and Millet there will be an opportunity for questions and answers.

Live access to the call on a listen only basis will also be available on the internet at the Company's website at www.berkshirebank.com by clicking on the Investor Relations link and then selecting the Webcast link on the Corporate Profile page. A replay of the call will also be available at the website for an extended period of time.

BACKGROUND

Berkshire Hills Bancorp, Inc. is the holding company for Berkshire Bank - AMERICA'S MOST EXCITING BANK(SM). Established in 1846, Berkshire Bank is one of Massachusetts' oldest and largest independent banks and the largest banking institution based in Western Massachusetts. The Bank is headquartered in Pittsfield, Massachusetts with branches serving communities throughout Western Massachusetts and Northeastern New York. The Company is a diversified regional financial services company, delivering exceptional customer service and a broad array of competitively priced deposit, loan, insurance, wealth management and trust services and investment products. The Company has entered into a definitive merger agreement to acquire Factory Point Bancorp, Inc., which is located in Southern Vermont.

FORWARD-LOOKING STATEMENTS

Statements contained in this news release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like “believe,”“expect,” “anticipate,”“estimate,” and “intend” or future or conditional verbs such as “will,”“would,” “should,”“could” or “may.” These statements are based on the beliefs and expectations of management. Since these statements reflect the views of management concerning future events, these statements involve risks, uncertainties, and assumptions. These risks and uncertainties include among others: changes in market interest rates and general and regional economic conditions; changes in government regulations; changes in accounting principles; the quality or composition of the loan and investment portfolios; and the achievement of anticipated future earnings benefits from recent acquisitions. In addition, the following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: adverse governmental or regulatory policies may be enacted; the risks associated with continued diversification of assets and adverse changes to credit quality; and difficulties associated with achieving expected future financial results. Additionally, other risks and uncertainties may be described in the Company’s quarterly reports on Form 10-Q for the quarters ended March 31, June 30, and September 30 and in its annual report on Form 10-K, each filed with the Securities and Exchange Commission, which are available at the Securities and Exchange Commission’s internet website (www.sec.gov) and to which reference is hereby made. Therefore, actual future results may differ significantly from results discussed in these forward-looking statements and undue reliance should not be placed on such statements. The Company assumes no obligation to update any forward-looking statements.

This news release also contains certain forward-looking statements about the proposed merger of Berkshire Hills Bancorp and Factory Point. These statements include statements regarding the anticipated closing date of the transaction and anticipated future results. Certain factors that could cause actual results to differ materially from expected results include delays in completing the merger, difficulties in achieving cost savings from the merger or in achieving such cost savings within the expected time frame, difficulties in integrating Berkshire Hills Bancorp and Factory Point, increased competitive pressures, changes in the interest rate environment, changes in general economic conditions, legislative and regulatory changes that adversely affect the business in which Berkshire Hills Bancorp and Factory Point are engaged, changes in the securities markets and other risks and uncertainties disclosed from time to time in documents that Berkshire Hills Bancorp files with the Securities and Exchange Commission.

The proposed transaction has been submitted to Berkshire Hills’ and Factory Point’s stockholders for their consideration. Berkshire Hills has filed with the SEC a registration statement on Form S-4 that includes a joint proxy statement/prospectus and other relevant documents concerning Berkshire Hills Bancorp, Factory Point, the proposed transaction, the persons soliciting proxies in the merger and their interest in the merger and related matters. Stockholders of Berkshire Hills and Factory Point are urged to read the registration statement, including the joint proxy statement/prospectus and any other relevant documents filed with the SEC because they contain important information. You can obtain a free copy of all documents filed with the SEC by Berkshire Hills on the SEC’s web site (http://www.sec.gov). In addition, documents field with the SEC by Berkshire Hills are available, without charge, by directing a request to Ann Racine, Investor Relations, Berkshire Hills Bancorp, Inc., 24 North Street, Pittsfield, MA 01201 (413) 236-3239.

Berkshire Hills and its directors and executive officers may be deemed to be participants in the solicitations of proxies from its stockholders in connection with the merger. Information about the directors and executive officers of Berkshire Hills and their ownership of Berkshire Hills common stock is set forth in the proxy statement, dated April 2, 2007, for Berkshire Hills’ 2007 annual meeting of stockholders, which is available on Berkshire’s website at www.berkshirebank.com or on the SEC’s website.

NON-GAAP FINANCIAL MEASURES

This press release contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles (“GAAP”). The Company’s management uses certain non-GAAP measures for operational and investment decisions and believes that these measures are among several useful measures for understanding its operating results, performance trends, and financial condition. These measures should not be construed as 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 and elsewhere in this release. 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 during the current fiscal period, and compared to the prior fiscal period. The core earnings measure is not intended to substitute for GAAP net income, but is an additional measure that the Company uses and believes is useful for understanding its operating results. During the third quarter of 2006, the Company identified charges related to the balance sheet repositioning and to the loan loss allowance adjustment as non-core in the computation of core earnings. The Company views these charges as infrequent and not specifically related to the Company’s operating activities during the year.

Contacts:

Berkshire Hills Bancorp, Inc.
Michael P. Daly, 413-236-3194
President and Chief Executive Officer
or
John S. Millet, 413-236-3252
Senior Vice President,
Interim Chief Financial Officer, and Treasurer