6
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[x] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996].
For the fiscal year ended December 31, 2007
---------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED].
For the transition period from _______________ to ______________________
Commission File Number 001-51584_______
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Berkshire Bank 401(k) Plan
B: Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Berkshire Hills Bancorp, Inc.
24 North St.
Pittsfield, MA 01201
BERKSHIRE BANK 401(k) PLAN
Financial Statements and Supplemental Schedule
Years Ended December 31, 2007 and 2006
CONTENTS
BERKSHIRE BANK 401(k) PLAN
Financial Statements and Supplemental Schedule
Years Ended December 31, 2007 and 2006
The following financial information is submitted herewith: Page
Report of Independent Registered Public Accounting Firm 1
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4-10
Schedule H, Line 4i - Schedule of Assets
(Held at End of Year) 11
WOLF Certified Public Accountants
& COMPANY, P.C. and Business Consultants
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee
Berkshire Hills Bancorp, Inc.
Pittsfield, Massachusetts
We have audited the accompanying statement of net assets available for benefits
of Berkshire Bank 401(k) Plan (the "Plan") as of December 31, 2007, and the
related statement of changes in net assets available for benefits for the year
ended December 31, 2007. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audit. The financial statements of the Plan as
of and for the year ended December 31, 2006, were audited by other auditors by
whose report, dated on October 10, 2007, expressed an unqualified opinion.
We conducted our audit in accordance with the auditing standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2007, and the changes in net assets available for benefits for the
year ended December 31, 2007, in conformity with accounting principles generally
accepted in the United States of America.
Our audit of the financial statements was made for the purpose of forming an
opinion on the basic financial statements taken as a whole. The supplemental
schedule of assets (held at year end) for 2007 is presented for the purpose of
additional analysis and is not a required part of the basic financial
statements, but is supplementary information required by the United States
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. This supplemental schedule
is the responsibility of the Plan's management. The supplemental schedule has
been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ Wolf & Company, P.C.
Boston, Massachusetts
December 8, 2008
BERKSHIRE BANK 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEIFTS
Years Ended December 31, 2007 and 2006
2007 2006
--------- --------
ASSETS
Cash held for investment $ 3,385,352 $ 1,952,230
Investments, at fair value 38,345,382 25,229,870
Participant loans 746,559 518,495
----------- -----------
42,477,293 27,700,595
----------- -----------
Receivables:
Employer contributions 52,410 -
Participant contributions 56,624 -
----------- -----------
109,034 -
----------- -----------
Net assets available for benefits $42,586,327 $27,700,595
=========== ===========
See accompanying notes to financial statements.
2
BERKSHIRE BANK 401(k) PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Years Ended December 31, 2007 and 2006
2007 2006
--------- --------
Investment income:
Net (depreciation) appreciation in fair value
of investments $ (603,821) $ 2,429,118
Interest and dividends 1,408,238 869,664
----------- -----------
804,417 3,298,782
----------- -----------
Contributions:
Employer 1,314,067 910,977
Particpants 1,535,647 1,094,329
Rollover 1,477,049 522,545
----------- -----------
4,326,763 2,527,851
----------- -----------
Assets transferred in from merged/terminated plans 13,670,154 77,381
----------- -----------
Total additions 18,801,334 5,904,014
----------- -----------
Deductions from net assets attributed to:
Withdrawals and benefits paid to participants 3,905,463 5,140,149
Administrative fees 10,139 7,971
Total deductions 3,915,602 5,148,120
----------- -----------
Net increase in net assets available for benefits 14,885,732 755,894
Net assets available for benefits:
Beginning of year 27,700,595 26,944,701
----------- -----------
Net assets available for benefits:
End of year $42,586,327 $27,700,595
=========== ===========
See accompanying notes to financial statements.
3
BERKSHIRE BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2007 and 2006
1. DESCRIPTION OF THE PLAN
The Berkshire Bank 401(k) Plan (the "Plan") was established on April 11,
1993.
The following brief description of the Plan is provided for general
information purposes only. Participants should refer to the Plan Agreement
for a more complete description of the Plan's provisions.
General
The Plan is a defined contribution plan covering all eligible employees of
Berkshire Bank (the "Bank" or the "Plan Sponsor"). The Plan is subject to
the provisions of the Employee Retirement Income Security Act of 1974
("ERISA"). Vanguard Fiduciary Trust Company serves as the Trustee of the
Plan. The Vanguard Group ("Vanguard" or the "Custodian") is the custodian
of the Plan.
In 2005, Berkshire Bank, the Plan Sponsor, terminated its Employee Stock
Ownership Plan ("ESOP"). During 2007, active employees of Berkshire Bank
were given the option to transfer their shares of stock from the ESOP into
the Plan. The value transferred into the Plan is the value of the shares as
posted on the Nasdaq Stock Market as of the date of transfer.
On November 1, 2006, Berkshire Bank acquired five local insurance agencies.
These insurance agencies all participated in one plan, the Alliance
Berkshire Insurance 401(k) Plan ("Alliance"). During 2007, Alliance was
merged into the Plan. Effective on the merger date, all employees of
Alliance followed the eligibility requirements of the Plan but were given
credit for hours of service with their previous employer.
On September 21, 2007, Berkshire Bank acquired Factory Point National Bank
of Manchester Center ("Factory Point"). Effective November 5, 2007, the
Factory Point National Bank 401(k) Profit Sharing Plan was merged into the
Plan. Effective on the merger date, all employees of Factory Point followed
the eligibility requirements of the Plan but were given credit for hours of
service with their previous employer.
4
BERKSHIRE BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
DESCRIPTION OF THE PLAN (continued)
Contributions
Each year, participants may contribute a percent of pretax annual
compensation, excluding certain types of restricted compensation, subject
to certain limitations as defined by the Plan and the Internal Revenue Code
("IRC"). The maximum participant deferral was $15,500 and $15,000 for the
Plan years ended December 31, 2007 and 2006. In addition, all employees who
are eligible to make salary reductions under the Plan and who have attained
age 50 before the close of the Plan year are eligible to make catch-up
contributions, as defined by the Economic Growth and Tax Relief
Reconciliation Act of 2001 ("EGTRRA"). Participants may also contribute
rollover amounts representing distributions from other qualified retirement
plans and IRAs. Participants direct the investment of their contributions
into various investment options offered by the Plan. Participants may
change their rate of contribution each pay period.
The Bank matches a portion of eligible employee contributions. During 2007
and 2006, the Bank matched 100% of eligible employee contributions up to 4%
of the participant's annual compensation.
In addition, the Bank makes a Safe Harbor non-elective contribution to the
account of each eligible employee in an amount equal to 3% of the
participant's annual compensation, excluding certain types of restricted
compensation.
Plan Eligibility
Employees of the Bank are eligible to participate in the Plan after
attaining twenty-one years of age and completing one year of service with
1,000 hours during their initial year of employment. 500 hours of service
must be exceeded each subsequent year to avoid a break in eligibility
service. Service credit is given to employees of certain predecessor
employers as described in the Plan document for participation and vesting
purposes. Employees may join the Plan on the first of the month following
the month in which eligibility requirements are satisfied.
Participant Accounts
Each participant's account is credited with the participant's contribution
and allocations of (a) the Company's matching and additional contributions
for non-highly compensated employees, if any, and (b) the Plan's investment
earnings. Allocations are based on participant earnings or account
balances, as defined by the Plan. The benefit to which a participant is
entitled is the benefit that can be provided from the participant's vested
account.
5
BERKSHIRE BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
DESCRIPTION OF THE PLAN (continued)
Investments
Participants direct the investment of their contributions into investment
options offered by the Plan which include selected pooled separate accounts
of Vanguard and common shares of Berkshire Hills Bancorp, Inc., the parent
company of the Bank. Employer contributions are invested in each
participant's account according to the participant's selected allocation.
Participants may change or transfer their investment options at any time
via an automated telephone system or the Custodian's website.
Vesting
Participants are 100% vested in all contributions plus actual earnings
thereon.
Participant Loans
Participants may borrow from their fund accounts an amount equal to $50,000
or 50% of their vested account balance, whichever is less. In addition, the
$50,000 limit is reduced by the highest outstanding loan balance (of any
previous loans made) in the previous twelve months. The loans are secured
by the balance in the participant's accounts and bear interest at The Wall
Street Journal prime rate plus one percentage point as of the loan
application review date. Interest rates ranged from 5.00% to 9.25% for the
years ended December 31, 2007 and 2006. In general, principal and interest
are paid ratably over a period not to exceed five years through regular
payroll deductions. Loans used to finance the participant's principal
residence are repaid over a period of time, up to 20 years.
Payment of Benefits
On termination of service due to death, disability, normal retirement, or
attaining age 59 1/2 a participant may elect to receive either a lump sum
amount equal to the value of the participant's vested interest in their
account, annual installments, or defer distribution until a later date. If
the vested portion of a participant's account balance is $5,000 or less,
this amount is paid as a lump sum distribution as soon as possible
following termination, retirement, disability, or to the beneficiary
following death.
If the participant's account balance is between $1,000 and $5,000 and they
fail to direct a distribution or rollover, their mandatory distribution are
rolled over to an IRA established on their behalf.
Participants may request a benefit payment in the case of financial
hardship, subject to certain limitations as defined by the Plan.
6
BERKSHIRE BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
DESCRIPTION OF THE PLAN (concluded)
Administrative Expenses
The Plan's administrative expenses are paid by either the Plan or the Plan
Sponsor as provided by the Plan document. Administrative expenses paid by
the Bank were $15,050 and $20,500 for the years ended December 31, 2007 and
2006, respectively.
Plan Termination
Although it has not expressed any intent to do so, the Bank has the right
under the Plan to discontinue its contributions at any time and to
terminate the Plan, subject to the provisions of ERISA. In the event of
Plan termination, the net assets of the Plan would be allocated as
prescribed by ERISA and its related regulations.
2. SUMMARY OF ACCOUNTING POLICIES
A summary of significant accounting policies consistently applied in the
preparation of the accompanying financial statements follows.
Basis of Accounting
The accompanying financial statements have been prepared using the accrual
method of accounting.
Use of Estimates
In preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management is required
to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities
at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
Investment Valuation and Income Recognition
The Plan's investments are stated at fair value. Shares of registered
investment companies are valued at quoted market prices which represent the
net asset value of shares held by the Plan at year-end. Investments in
Berkshire Hills Bancorp, Inc. common stock and other equities are valued at
the closing market price as of the last trade date of the year. Fixed
income securities are valued using the last quoted bid price. Participant's
notes are valued at cost, which approximates fair value.
7
BERKSHIRE BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
SUMMARY OF ACCOUNTING POLICIES (concluded)
Investment Valuation and Income Recognition (concluded)
Purchases and sales of investments are recorded on a trade-date basis.
Investment income is recorded on the accrual basis. Dividend income is
recorded on the ex-dividend date. Capital gain distributions are included
in dividend income.
Risks and Uncertainties
The Plan is comprised of various investment securities, including
investments in mutual funds, registered investment companies, common
collective trusts, and in employer stock. Investment securities are exposed
to various risks, such as interest rate, market, and credit. Due to the
level of risk associated with certain investment securities, it is at least
reasonably possible that changes in the values of investment securities
will occur in the near term and that such changes could materially affect
participants' account balances and the amounts reported in the statement of
net assets available for benefits.
3. CASH HELD FOR INVESTMENT
The following schedule presents the fair market values of the Plan's cash
held for investment:
December 31,
--------------------------
2007 2006
--------- --------
Cash held for investment:
*VGI Brokerage option $ - $ 45
*Vanguard Prime Money Market 3,385,352(a) 1,952,230(b)
----------- -----------
$ 3,385,352 $ 1,952,230
=========== ===========
(a) Investment represents 5% or more of Plan net assets at December 31, 2007.
(b) Investment represents 5% or more of Plan net assets at December 31, 2006.
* Represents a party-in-interest under ERISA.
8
BERKSHIRE BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
4. INVESTMENTS, AT FAIR VALUE
The following schedule presents the fair market value of the Plan's
investments:
December 31,
--------------------------
2007 2006
--------- --------
Mutual Funds:
*Royce Low Priced Stock $ 503,808 $ 550,550
*Vanguard 500 Index Inv. 7,158,236(a) 4,599,812(b)
*Vanguard IT Treasury Inv. 2,746,411(a) 1,927,614(b)
*Vanguard International Growth Fund 3,506,924(a) 2,059,998(b)
*Vanguard Mid-Cap Index Fund 1,713,087 560,760
*Vanguard Morgan Growth Inv. 488,827 159,822
*Vanguard Selected Value 616,392 557,846
*Vanguard Small-Cap Growth Index 2,081,181 1,536,840(b)
*Vanguard TGT Retirement 2015 4,174,760(a) 2,833,437(b)
*Vanguard TGT Retirement 2025 1,274,355 208,767
*Vanguard TGT Retirement 2035 483,020 344,158
*Vanguard TGT Retirement 2045 602,980 230,452
*Vanguard Target Retirement Inc. 1,009,957 1,143,321
*Vanguard Total Stock Market Inv. 5,647,432(a) 5,595,337(b)
*Vanguard Windsor II Fund Inv. 1,095,670 791,400
Common stock:
*VGI Brokerage Option Company Stock 44,904 41,717
*Berkshire Hills Bancorp, Inc. Common Stock 5,197,438(a) 2,088,039(b)
----------- -----------
$38,345,382 $25,229,870
=========== ===========
(a) Investment represents 5% or more of Plan net assets at December 31, 2007.
(b) Investment represents 5% or more of Plan net assets at December 31, 2006.
* Represents a party-in-interest under ERISA.
During 2007 and 2006, the Plan's investments (including investments bought,
sold, and held during the year) appreciated (depreciated) in value by
$(603,821) and $2,429,118, respectively, as follows:
December 31,
--------------------------
2007 2006
--------- --------
Unrealized gain (loss), net $(1,006,293) $2,197,762
Realized gain, net 402,472 231,356
----------- -----------
$ (603,821) $2,429,118
=========== ===========
9
BERKSHIRE BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS (Concluded)
5. TAX STATUS
The Bank adopted a Prototype Plan whose most recent determination letter
from the Internal Revenue Service, dated August 22, 2001, stated that the
Plan and related Trust were designed in accordance with applicable sections
of the IRC. The Plan has been amended since receiving this letter; however,
the Plan Administrator believes the Plan is currently operated in
compliance with the applicable requirements of the IRC.
6. ADMINISTRATION OF PLAN ASSETS
The Plan assets are held by Vanguard Fiduciary Trust Company, the Trustee
of the Plan.
Bank contributions, participant elective deferrals, and participant
accounts are held and administrated by Vanguard, who invests cash received
in accordance with participants instructions and makes distributions to
participants.
Certain administrative functions are performed by officers or employees of
the Bank. No such officers or employees receive compensation for such
functions from the Plan.
7. RELATED PARTY TRANSACTIONS
The Bank contributed $1,314,067 and $910,977 to the Plan for the years
ended December 31, 2007 and 2006, of which $52,410 and $0 was owed the Plan
at December 31, 2007 and 2006, respectively. In addition, the Bank paid
expenses in connection with the administrations of the Plan, totaling
$15,050 and $20,500 for the years ended December 31, 2007 and 2006,
respectively.
The Plan has investments in common stock of Berkshire Hills Bancorp, Inc.,
the parent company of the Bank. In addition, certain of the investment
options are managed by Vanguard. Transactions in such investments qualify
as party-in-interest transactions.
8. ASSETS TRANSFERRED IN FROM MERGED/TERMINATED PLANS
The assets transferred in from merged plans are as follows:
v December 31,
--------------------------
2007 2006
--------- --------
ESOP $ 1,943,781 $ 75,874
Alliance 2,650,583 -
Factory Point 7,064,422 -
Adjustment to Berkshire Hills, Inc.
common stock transferred in from
cost value to maket value 2,011,368 1,507
----------- -----------
$13,670,154 $ 77,381
=========== ===========
10
BERKSHIRE BANK 401(k) PLAN
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS
(HELD AT END OF YEAR)
December 31, 2007
a b c d
----- --------------------------------- ---------------- --------------
Identity of Issuer, Borrower Description of
Lessor or Similar Party and Investment-number Current
Description of Investment of units/shares Value (1)
--------------------------------- ---------------- -------------
Cash held for investement:
* Vanguard Prime Money Market 3,383,352.000 $ 3,385,352
Mutual Funds:
* Royce Low Priced Stock 34,087.163 503,808
* Vanguard 500 Index Inv. 52,965.123 7,158,236
* Vanguard IT Treasury Inv. 242,830.335 2,746,411
* Vanguard International Growth Fund 141,294.289 3,506,924
* Vanguard Mid-Cap Index Fund 82,757.843 1,713,087
* Vanguard Morgan Growth Inv. 25,016.724 488,827
* Vanguard Selected Value 32,288.744 616,392
* Vanguard Small-Cap Growth Index 104,007.020 2,081,181
* Vanguard TGT Retirement 2015 319,659.999 4,174,760
* Vanguard TGT Retirement 2025 92,883.015 1,274,355
* Vanguard TGT Retirement 2035 33,038.264 483,020
* Vanguard TGT Retirement 2045 39,958,940 602,980
* Vanguard Target Retirement Inc. 90,741.841 1,009,957
* Vanguard Total Stock Market Inv. 159,712.442 5,647,432
* Vanguard Windsor II Fund Inv. 35,020.222 1,095,670
Common stock:
* Vanguard Brokerage Option Company Stock 44,904.040 44,904
* Berkshire Hills Bancorp, Inc. Common Stock 199,901.475 5,197,438
Loan Fund:
Participant loans 5.00%-9.25% 746,559
----------- -----------
$42,477,293
===========
(1) As allowed by ERISA, cost information may be omitted with respect to
participant or beneficiary directed investments under an individual account
plan.
* Represents a party-in-interest as defined by ERISA.
See report of independent registered public accounting firm.
11
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
BERKSHIRE BANK 401(k) PLAN
Date January 12, 2009 By: /s/ Linda A. Johnston
-------------------------
Name: Linda A. Johnston
Title: SVP, Human Resources
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the Registration Statement of
Berkshire Hills Bancorp, Inc. on Form S-8 (SEC File No. 333-146604) of our
report dated December 8, 2008 with respect to the financial statements of the
Berkshire Bank 401(k) Plan for the year ended December 31, 2007 on Form 11-K.
/s/ Wolf & Company, P.C.
Boston, Massachusetts
January 12, 2009