Berkshire Hills Reports $0.49 Third Quarter Core EPS Total Assets Climb to $2.5 Billion Following Vermont Acquisition Balance Sheet Strengthened by Deleveraging

Berkshire Hills Bancorp (NASDAQ: BHLB), parent of Berkshire Bank, reported 2007 third quarter core income of $4.4 million ($0.49 per share). Core income increased by $0.01 per share before one-time items and Berkshire’s investment in new branches. Third quarter core 2006 income was $4.7 million ($0.54 per share). Last year’s results included a $0.03 per share one-time catch-up dividend received from the Federal Home Loan Bank of Boston (FHLBB). Berkshire’s investment in de novo branches increased expenses by $0.03 per share to $0.07 per share in this year’s third quarter, compared to $0.04 per share in 2006 (all per share numbers are after-tax).

Berkshire’s GAAP third quarter net income totaled $0.9 million ($0.10 per share) in 2007, compared to a loss of $2.1 million ($0.25 per share) in 2006. The most recent quarter included after-tax non-core charges of $3.5 million ($0.38 per share) related to a balance sheet deleveraging and integration costs in association with the Factory Point Bancorp acquisition, together with expense restructure costs. In the third quarter of 2006, results included after-tax non-core charges of $7.1 million ($0.82 per share), including $3.6 million ($0.42 per share) for an adjustment of the loan loss allowance and $3.5 million ($0.40 per share) related to a balance sheet repositioning.

Third quarter highlights include:

• Completed acquisition of Factory Point Bancorp in Manchester Center, Vermont on September 21, adding 7 branches, bringing total offices to 48 locations in 3 states
• 11% annualized organic growth in transaction deposit account balances
• 9% linked quarter organic growth in bank fee income (excluding seasonal insurance fees and fees from Factory Point)
• Net interest margin increased to 3.20% from 3.15% in the linked quarter
• 5% annualized organic loan growth

For the first nine months of 2007, Berkshire reported a 5% increase in core income to $14.0 million ($1.57 per share), compared to $13.3 million ($1.52 per share) in the first nine months of 2006. The benefit from acquired insurance agencies and organic growth has more than offset the $0.11 per share increase in Berkshire’s investment in de novo branch costs (after-tax). Nine month GAAP net income increased by 46% in 2007, totaling $10.5 million ($1.17 per share), compared to $7.2 million ($0.82 per share) in 2006. Nine month results in both years were affected by the third quarter non-core items discussed previously.

Michael P. Daly, President and Chief Executive Officer, stated, “Berkshire had a solid third quarter. Our year-to-date core EPS increased 3% due to our growth initiatives. Our net interest margin increased during the quarter, benefiting from a focused pricing culture. We anticipate future benefit from the recent reduction in interest rates by the Federal Reserve Bank. Our primary bank revenue drivers of loan growth, transaction deposit growth, and fee income growth all contributed to our progress in the third quarter and for the year-to-date. Excluding seasonal insurance fees, we generated positive sequential operating leverage through a combination of revenue growth and expense reductions.”

Remarking further, Mr. Daly said, “We were very pleased to complete the acquisition of Factory Point Bancorp of Manchester Center, Vermont on September 21 on schedule. The 7 branches of Factory Point in Southern Vermont have brought us to a total of 48 banking and insurance offices located in Massachusetts, New York, and Vermont. This acquisition brought us to $2.5 billion in total assets, and our market capitalization on the merger date exceeded $340 million. We feel very comfortable that we will achieve our 25% cost save goal with this acquisition, and we are pleased with our integration progress and the excitement of our Southern Vermont team. We also reported after-tax non-core charges of $0.38 per share resulting from our merger and the associated restructuring of our balance sheet, along with an expense restructure. These actions improve the capital and liquidity ratios of our combined bank, and reduce our interest rate risk. They are expected to benefit our future net interest income, net interest margin, and efficiency ratio. We also expect to exceed the $0.04 annual EPS accretion we targeted for the Factory Point acquisition. Taken together, these actions improve our outlook for quality earnings growth supported by a stronger balance sheet.”

Mr. Daly continued, “In last year’s third quarter, we recorded an increase in the loan loss allowance due to our assessment that benign credit conditions had ended. We feel that our conclusion was borne out by economic events since that time, although we also feel that our local markets have been sheltered from the excesses we are now seeing in other markets. While we have seen some increases in delinquencies and nonperforming loans, these primarily consist of a small number of commercial loans. We feel that our credit disciplines are working to contain loan losses. Neither Berkshire nor Factory Point have operated subprime lending programs or purchased investment securities backed by subprime mortgages. We wrote-down our largest nonperforming loan by $1.5 million during the quarter. After the Factory Point acquisition, we ended the quarter with our allowance at 1.14% of total loans, which is unchanged from the start of the year. We have moderated our loan growth this year as we maintain our risk management focus in this softer economic environment.”

Mr. Daly concluded, “We also strengthened our executive team during the quarter. We have been very impressed with the quality of the Factory Point operation, and we were quite pleased that its President, Guy Boyer, has agreed to join our management team. Guy’s extensive knowledge of our markets will be an asset to our overall business development. We announced in March that Kevin Riley was named Chief Financial Officer; Kevin officially started on August 1 and our earnings are already benefiting from his efforts. John Millet, previously SVP/Controller, was promoted to Chief Operating Officer of Berkshire Insurance Group where he can help manage the growth and integration of this important business segment. In September, we were pleased to welcome Stephen Souky, CPA as Vice President and Controller. Steve brings considerable experience from his previous position as SVP Finance at NBT Bancorp. We feel that we have assembled an exceptional executive team to take us to higher levels of performance and market success as a regional bank. Additionally, we recently welcomed Factory Point Director, Susan M. Hill, as a Director of Berkshire. Susan is a CPA and we are pleased that she will contribute her perspective and expertise to our governance.”

DIVIDEND DECLARED

The Board of Directors declared a quarterly cash dividend of $0.15 per share. The dividend will be payable to stockholders of record at the close of business on November 8, 2007, and will be distributed on or about November 22, 2007. In the second quarter of 2007, Berkshire increased the quarterly cash dividend by 7% from $0.14 per share.

FACTORY POINT ACQUISITION

On September 21, 2007, Berkshire completed the acquisition of Factory Point Bancorp, adding seven branches in Southern Vermont, and increasing the total number of bank and insurance offices to 48 locations in Massachusetts, New York, and Vermont. Concurrent with this merger, Factory Point National Bank of Manchester Center was merged into Berkshire Bank. This acquisition was completed on schedule, and was funded with 80% stock and 20% cash. Total merger consideration was $79 million, including $16 million in cash and $61 million in stock based on the issuance of 1.91 million shares of common stock recorded at $32.03 per share, as well as the assumption of stock options valued at $2 million. Total direct merger costs of $4 million (net of taxes) were recorded as goodwill.

Assets acquired totaled $391 million and liabilities acquired totaled $306 million. Goodwill totaling $53 million was recorded for this acquisition and is not expected to be deductible for tax purposes. A $7 million core deposit premium intangible asset was recorded and will be amortized on an accelerated basis over eight years. The merger integration is proceeding well and the Company expects to achieve its goal of 25% cost savings by the end of 2007. The Company also expects to exceed the $0.04 targeted annual EPS accretion and to achieve double digit medium term cash return on equity (before amortization expense) based on future revenue growth. Acquired earnings are expected to provide surplus capital available for potential stock repurchases and other capital uses.

BALANCE SHEET DELEVERAGING

In conjunction with the completion of the Factory Point acquisition, Berkshire sold assets totaling $82 million as part of a deleveraging program. The total loss recorded on the deleveraging was $3.8 million. This deleveraging was designed to improve the capital and liquidity ratios of the combined bank, and to reduce interest rate sensitivity by liquidating certain longer duration assets. The assets sold had an estimated duration of 5.1 years and an average book yield of 4.9%. Assets sold consisted of $32 million of mortgage backed securities and $50 million of residential mortgages; these assets were all prime conventional mortgage related products. All sale proceeds were used to pay down FHLBB borrowings, including $48 million of callable borrowings with an average maturity of about 2 years and an average cost of about 5.7%. The remaining borrowings paid off were overnight borrowings. This deleveraging will also benefit earnings, including an estimated 10 basis point initial increase in the net interest margin, and first year incremental net interest income of approximately $350 thousand.

Additionally, approximately $35 million of longer duration Factory Point securities were liquidated, including approximately $25 million of municipal securities and $10 million of other debt securities. Approximately $10 million were sold prior to the merger date, with the remainder sold shortly after that date. These securities were marked to market as of the acquisition date, and they were sold for an amount that approximated this value. Accordingly, there was no significant income impact recorded for Berkshire related to the sale of these Factory Point securities. Proceeds from these securities sales were being reinvested in short term mortgage backed securities at quarter-end.

Despite the deleveraging, total investment securities increased by $13 million during the quarter due to the addition of $68 million of acquired Factory Point securities, consisting mostly of conventional government agency and mortgage backed securities, and municipal bonds. Total borrowings included $34 million in acquired Factory Point borrowings. Total borrowings were also impacted by borrowings totaling $15 million which were used by Berkshire to fund cash consideration paid in the acquisition.

FINANCIAL CONDITION

Most major categories of assets and liabilities increased in the third quarter primarily due to the Factory Point acquisition. Loans, investments, and borrowings were also affected by the deleveraging. Total assets increased by $302 million to $2.47 billion at quarter-end from $2.17 billion at mid-year. Total loans increased to $1.94 billion from $1.73 billion. Linked quarter organic loan growth totaled $23 million (5% annualized). This organic growth included $22 million (14% annualized) in residential mortgages and $12 million (37% annualized) in commercial construction loans. Linked quarter organic growth also included $3 million (3% annualized) in consumer loans, while all other commercial loans decreased by $14 million (9% annualized). Berkshire expanded its prime residential mortgage lending, and commercial construction loan growth primarily reflected seasonal funding of construction commitments. The decrease in all other commercial loans primarily reflected selective runoff targeted by the Company.

Nonperforming assets measured 0.48% of total assets at quarter-end, compared to 0.42% at the prior quarter-end. Performing delinquent loans were 0.71% of total loans at quarter-end, compared to 0.36% at the prior quarter-end. This primarily related to an increase in 30 day delinquent commercial loans. Third quarter net loan charge-offs totaled $1.9 million which increased from $0.6 million in the prior quarter. This included a $1.5 million write-down on the Company’s largest nonperforming loan, a commercial business loan, which was reduced to $4.7 million after the write-down. This charge reflected a decrease in estimated collateral values for this credit, which is in bankruptcy. The Company had previously established a $1.0 million reserve on this loan. The annualized year-to-date rate of net loan charge-offs was 0.23%. The ratio of the loan loss allowance to total loans increased to 1.14% at quarter-end from 1.11% at the start of the quarter. This ratio included the impact from the completion of the Factory Point acquisition, and also benefited from the sale of $50 million of residential mortgages in the balance sheet deleveraging.

Non-maturity deposits grew by $10 million (5% annualized) from organic growth, led by transaction deposits, which grew at an 11% annualized organic growth rate. This reflected account growth in de novo branches, and Berkshire’s strategy of promoting checking accounts. Additionally, Berkshire has emphasized savings and money market account promotions, and has reduced promotion of higher-costing time deposits. Due to run-off of these higher costing deposits, total deposits decreased at a 2% annualized organic rate in the third quarter, and the average cost of deposits decreased by 0.03% compared to the linked quarter.

Stockholders’ equity increased due to the issuance of shares for the Factory Point acquisition. Goodwill increased by $56 million, including $53 million related to the Factory Point acquisition, and $3 million related to contingent payables for insurance agencies acquired in 2006. Total book value per share increased to $30.82 from $30.12, while tangible book value per share decreased to $13.79 from $16.40. The ratio of total equity to assets increased to 13.4% from 12.3%, including the benefit of the new shares issued and the balance sheet deleveraging. The ratio of tangible equity to assets decreased to 6.5% from 7.1%.

RESULTS OF OPERATIONS

Most major categories of income and expense increased in the third quarter, including the benefit of the Factory Point acquisition, which contributed approximately $0.02 per share to earnings for the quarter. Core earnings declined by $0.03 per share from the linked quarter, due to a seasonal $0.07 per share decline in insurance segment revenues (after tax), which was partially offset by a $0.02 contribution from Factory Point operations. Non-interest expense related to the investment in the de novo branch program was $0.07 per share after tax for each of the last two quarters, compared to $0.04 per share in the third quarter of 2006. GAAP earnings declined by $0.42 per share from the linked quarter due primarily to the previously mentioned non-core charges.

Year-to-year third quarter net interest income decreased by $0.1 million due to the $0.4 million catch-up FHLBB dividend received in 2006. Adjusting for the catch-up FHLBB dividend, net interest income increased year-to-year by $0.3 million (2%). The net interest margin increased to 3.20% in the most recent quarter from 3.15% in the linked quarter, and decreased slightly from 3.22% compared to the third quarter of 2006. The linked quarter increase in the margin included the benefit of revised deposit strategies and the higher margin from Factory Point.

Year-to-year third quarter fee income increased by $2.8 million (92%) primarily due to a $2.0 million increase in insurance fees related to new insurance agencies acquired in the fourth quarter of 2006. Banking fee income increased by $0.8 million (32%) due to organic growth and new checking account convenience services introduced in the fourth quarter of 2006. Insurance fees decreased seasonally by $1.1 million in the most recent quarter compared to the linked quarter, while banking fees increased by $0.4 million, including a $0.3 million increase in loan fees and $0.1 million in Factory Point fee income. Total wealth management assets increased during the quarter to $783 million, including about $230 million in assets previously managed by Factory Point. Assets under management increased 59% from year-end 2006.

Third quarter non-interest expense increased year-to-year by $5.2 million, including $1.6 million in non-core charges. Total core expense increased by $3.6 million (32%), including the impact of the insurance agency acquisitions, higher de novo branch costs, and organic growth. Linked quarter core non-interest expense decreased by $120 thousand (3% annualized) due to lower compensation expense. The Company initiated an expense reduction program in the third quarter, and recorded $0.5 million of non-core restructuring charges, net of $0.5 million in expense recovery credits. Non-core merger integration charges totaled $1.1 million. No income tax expense was recorded in the most recent quarter, as tax-exempt municipal bond and life insurance revenues exceeded pre-tax income due to the non-core charges recorded.

CONFERENCE CALL

Berkshire will conduct a conference call at 10:00 A.M. eastern time on Tuesday, October 30, 2007. President and Chief Executive Officer Michael P. Daly and Executive Vice President and Chief Financial Officer Kevin P. Riley will discuss highlights of the Company's third 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 #257323

(Both are needed to access the Replay)

Replay Dates: October 30, 2007 at 1:00 P.M. (ET) through

November 5, 2007 at 11:59 P.M. (ET)

Webcast replay: www.berkshirebank.com

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 Riley 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 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, Northeastern New York and Southern Vermont. The Bank is transitioning into a regional bank, delivering exceptional customer service and a broad array of competitively priced deposit, loan, insurance, wealth management and trust services and investment products. For more information on Berkshire Hills Bancorp or Berkshire Bank, visit www.berkshirebank.com or call 800-773-5601.

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 merger of Berkshire Hills Bancorp and Factory Point Bancorp. These statements include anticipated future operating results. Certain factors that could cause actual results to differ materially from expected results include delays, 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 is 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.

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. During the third quarter of 2007, the Company identified charges in conjunction with the acquisition of Factory Point Bancorp as non-core in the computation of core earnings. These charges included indirect merger costs and balance sheet deleveraging costs. Additionally, expense restructuring costs were deemed as non-core.