As per the terms of the agreement, Beacon’s subsidiary bank, Beacon Federal, will be intregated into Berkshire Bank and on completion of the deal, Berkshire will own a total of ten branches serving these markets, with nearly $700m in deposits, said the bank.

According to the deal, 50% of the outstanding Beacon shares will be exchanged for Berkshire shares at a fixed exchange ratio of 0.92 shares for each Beacon share, while the remaining 50% of Beacon shares will be exchanged for cash in the amount of $20.50 per share.

The transaction is prized at $20.35 per Beacon share, based on the $21.96 Berkshire closing stock price on 30 May 30 2012, representing 111% of Beacon’s tangible book value per share and a 3.4% premium to core deposits based on financial information for the period ended 31 March 2012.

As of 31 March 2012, Beacon manages seven full service offices with deposits valued $677m, and its main business if focused in the Syracuse market, as well as the Rome/Utica market, the US.

Commenting on the expansion of business, Berkshire president and chief executive officer Michael Daly said the New York expansion last year exceeded expectations in terms of financial return, customer retention, and business development opportunities.

"This merger will bring our total Central and Eastern New York branch count to 26 offices, with total deposits exceeding $1.4 billion," Daly added.

Each Beacon shareholder will have the right to elect the form of consideration, subject to proration procedures to maintain the overall 50%/50% mix of stock and cash consideration. The transaction is intended to qualify as reorganization for federal income tax purposes; consequently, the shares of Beacon common stock exchanged for shares of Berkshire common stock are expected to be transferred on a tax-free basis.

The deal is expected to complete during the fourth quarter of 2012, after obtaining approval from Beacon’s shareholders, as well as state and federal regulatory agencies.

Sandler O’Neill & Partners, acted as the financial advisor to Berkshire, and Keefe, Bruyette & Woods, worked as the financial advisor for Beacon.

Luse Gorman Pomerenk & Schick, served as outside legal counsel to Berkshire, while Kilpatrick Townsend & Stockton LLP served as outside legal counsel to Beacon.