Magazine article American Banker

Berkshire Hills' Quest to Become New England's Next Breakout Bank

Magazine article American Banker

Berkshire Hills' Quest to Become New England's Next Breakout Bank

Article excerpt

Byline: Laura Alix

With its pending purchase of Commerce Bank in Worcester, Mass., and a Boston address staked out for its new headquarters, Berkshire Hills Bancorp is moving closer toward its goal of becoming New England's next regional bank.

Though Berkshire, based in the western Massachusetts city of Pittsfield, has been bulking up in New England for the past decade, its deal for the $2.2 billion-asset Commerce is especially significant because it would thrust it over the $10 billion-asset threshold and raise its profile in Boston.

And for a bank with ambitions to become the go-to local player for middle-market companies, increased size and increased visibility in New England's largest and most dynamic market matter, said CEO Michael Daly.

Of course, Berkshire will face plenty of competition as it moves more aggressively into the Boston market. Boston is highly fragmented, with scores of community banks competing for market share with heavyweights like Bank of America, TD Bank, Santander and Citizens Financial Group.

Smaller regionals, including the $26 billion-asset Webster Financial in Waterbury, Conn., and the $40 billion-asset People's United Bank of Bridgeport, Conn., have also expanded into Boston in recent years largely to help offset slower growth in their home markets.

But Daly said he believes that, despite the competition, there is still room in the marketplace for a local institution that is capable of serving middle-market clients. The bulk of that business is now being handled by larger banks that moved into New England through acquisitions.

"Most of the business that we believe is available to us is probably with the big guys: Santander, TD Bank, Bank of America," Daly said.

David Bishop, an analyst with FIG Partners in Atlanta, agreed. "It's a wide-open market for a company that has the scale and capital to serve that middle-market business segment," Bishop said. Once the Commerce deal closes later this year, "you'll see Berkshire's growth profile start to step up," he added.

Berkshire has bought eight banks in the Northeast over the past dozen years and, in doing so, has more than quadrupled its assets, to $9.3 billion at March 31. It most recently expanded into New Jersey and Pennsylvania when it purchased the Pennsylvania-based Small Business Administration lending unit of Parke Bank in New Jersey in 2015 and the $1.1 billion-asset First Choice Bank a year later.

In 2012, it acquired Greenpark Mortgage in Needham, Mass., gaining a foothold in eastern Massachusetts. It began making commercial loans in the Boston market around the same time, and its presence there is a big reason its commercial and industrial loan portfolio has more than tripled, to $1.1 billion, over the past five years.

In building Berkshire from a small, local into a budding regional player, Daly said he has been trying to emulate one of the industry's most successful acquirers: M&T Bank Chairman and CEO Robert Wilmers. Like Berkshire, M&T, of Buffalo, N.Y., started small, acquiring local banks in markets close to home before expanding, methodically, into newer, often faster-growing, markets and moving into new business lines. …

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