KBRA Assigns BBB+ Senior Unsecured Debt Rating for Berkshire Hills Bancorp, Inc.

Kroll Bond Rating Agency (KBRA) assigns a senior unsecured debt rating of BBB+, subordinated debt rating of BBB, and short-term debt rating of K2 to Berkshire Hills Bancorp, Inc. (NYSE:BHLB), a bank holding company headquartered in Boston, MA. In addition, KBRA has assigns deposit and senior unsecured debt ratings of A-, a subordinated debt rating of BBB+, and short-term deposit and debt ratings of K2 for its subsidiary, Berkshire Bank (“the Bank”). The Outlook for all long-term ratings is Stable.

The ratings are supported by BHLB’s well diversified earning asset mix with above average contribution from noninterest revenue sources. Moreover, BHLB’s strong asset quality with historically low credit losses, as well as sound capital management practices, support the assigned ratings. The ratings are constrained by BHLB’s highly aggressive growth strategy in recent years, elevated noncore funding dependency, and below average historical performance in earnings and efficiency. However, BHLB has improved core metrics to near peer averages, surpassing 1% in core ROAA and 60% in core efficiency. Moreover, recent deposit gathering initiatives, coupled with deposit-leaning acquisitions, have improved the Bank’s core deposit base. The Stable Outlook for the long-term ratings reflects KBRA’s view towards BHLB’s earnings performance, with the expectation that core metrics continue to trend at or near peer averages.

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The ratings are based on KBRA’s Global Bank and Bank Holding Company Rating Methodology published on February 19, 2016.

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

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