Mass.’ new biggest bank: Berkshire Bank
Its roots may be in Western Massachusetts, but on Monday Berkshire Hills Bancorp Inc. set its ambitions firmly on Boston with plans to purchase Commerce Bancshares Corp. and move its headquarters to the city.
The combined bank would have $12 billion in assets and be the largest state-chartered bank in Massachusetts.
In announcing the deal, Michael Daly, Berkshire Bank’s chief executive officer, positioned the bank to fill the void created when many of Boston’s most influential financial institutions were swallowed up in mergers with out-of-state banks.
The city hasn’t had a large regional bank based here for nearly 20 years.
“We intend to fill a void that has existed for almost two decades,” Daly said. “A Boston headquartered, regional bank that was last seen with Bank of Boston/FleetBoston.”
Bank of Boston, once a local powerhouse, became part of Boston-based Fleet Bank in 1999. Five years later, FleetBoston Financial Corp. was acquired by Charlotte-based Bank of America.
On Monday, officials in Western Massachusetts were eager to ensure that Boston’s gain wasn’t Pittsfield’s loss, the current home of Berkshire Bank.
Daly and other Berkshire executives tried to reassure the business community there that the bank remained committed to the region. The bank doesn’t expect to cut any Berkshire Bank jobs as a result of the move.
The bank has 438 employees in Berkshire County, and 1,330 overall.
Bank officials said they were still reviewing Commerce Bank’s footprint and staff to determine if there are overlaps.
Berkshire County has worked to reinvent itself as a tourist and art destination, after its manufacturing economy dwindled, and Berkshire Bank has been central to that effort, said Jonathan Butler, president of 1Berkshire, a business and economic development organization.
The bank has financed redevelopment efforts in downtowns and donated to human services and nonprofit organizations, Butler said.
“They are a very active organization,” Butler said. “We’ve been assured by the bank that it won’t have an economic impact on the Berkshires.”
Berkshire Bank has been expanding in the past decade.
It has acquired smaller lenders in Massachusetts, Connecticut, New York, and New Jersey, in the past five years. Earlier this year, it opened its first Boston branch, although it had been lending in the city prior to that.
The Commerce purchase will also give Berkshire three more branches in Boston. The bank is looking at space for a headquarters in the city, officials said.
“Having your headquarters on the ground there, having people on the ground, developing relationships always makes a difference,” Daly said.
The bank also expects that a Boston headquarters will help it attract more skilled talent, Daly said.
The purchase of Commerce Bank, based in Worcester and founded in 1955, also gives Berkshire more of a presence in Central Massachusetts and expands its commercial lending portfolio. Business lending makes up about 80 percent of Commerce’s loans.
Commerce was among the state’s largest lenders to taxi companies, helping them finance medallions needed to operate cabs. About 7 percent of its commercial loans are to taxi cab operators.
Commerce has $103 million in medallion loans, about 15 percent of which are in default or are being restructured with terms that the borrower can pay, according to Berkshire Bank officials. Berkshire Bank will continue serving those taxi operators, but will no longer do medallion lending.
As part of the deal, Commerce Bank will get two seats on the Berkshire Bank board.
The deal still needs regulatory approval. It is expected to be completed by the end of the year.
The all-stock purchase is valued at $209 million, according to Berkshire Bank.
David Bishop, a senior equity analyst specializing in Northeast banks for Atlanta-based FIG Partners, said Berkshire Bank will likely gain a foothold in Boston, but it will take some time.
“They’re going about it the right way,” Bishop said.