UTICA — Berkshire Hills Bancorp, Inc. (NYSE: BHLB), parent of Berkshire Bank, is about to become a major player in the Utica–Rome banking market. On July 24, the Pittsfield, Mass.–based banking company announced that it has agreed to acquire 20 retail bank branches in upstate New York from Bank of America, including 11 offices […]
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UTICA — Berkshire Hills Bancorp, Inc. (NYSE: BHLB), parent of Berkshire Bank, is about to become a major player in the Utica–Rome banking market.
On July 24, the Pittsfield, Mass.–based banking company announced that it has agreed to acquire 20 retail bank branches in upstate New York from Bank of America, including 11 offices in Oneida and Herkimer counties.
The area branches include four in Utica and two in Rome, plus one office each in Ilion, West Winfield, Little Falls, New Hartford, and Whitesboro.
The 20 acquired branches have about $640 million in total deposits — 90 percent of which are retail and 10 percent of which are small-business deposits — and $5 million in loans, according to Berkshire. The 11 offices in the Utica–Rome market have more than $400 million in deposits.
Berkshire Bank currently has six branches in Oneida County (four in Rome, one in New Hartford, one in Oriskany Falls) and none in Herkimer County. The bank ranked seventh in deposit market share in the Utica–Rome metro area with $246 million in deposits and a 6.65 percent share of the total market’s deposits, according to June 30, 2012, FDIC data, the latest available. Bank of America, with its 11 branches, ranked third with $411.5 million in deposits and an 11.13 percent share, according to the FDIC numbers. Combining the two banks’ deposits, assuming no customer losses or gains, would move Berkshire up to second place in deposit share in the Utica–Rome market, behind the Bank of Utica and ahead of M&T Bank, according to the data.
Berkshire Bank officials, in a presentation to analysts, said the branch acquisition connects its franchise from western Massachusetts to the Syracuse area, filling in its footprint in the I-90 corridor.
The banking company first entered the Utica–Rome market in 2011 with its acquisition of Rome Savings Bank. Berkshire entered the Syracuse market in the fall of 2012 with its acquisition of DeWitt–based Beacon Federal.
Berkshire officials said the increased market share and presence it will gain from the Bank of America branch purchase will provide opportunities to its commercial-banking teams to make more business loans.
Berkshire is paying Bank of America a deposit premium of 2.25 percent, which it says is below recent national branch deals’ average premium of nearly 3.5 percent. The banking company said it expects its after-tax transaction costs to total $5 million.
The bank says the acquired deposits will help fund its future growth and add to its profit.
Berkshire says that it will use about half of the acquired deposit funds immediately to replace higher cost borrowings, with the remainder invested in short-duration securities that could support future growth initiatives.
The other nine upstate New York offices that Berkshire is acquiring are in Amsterdam, Cairo, Chatham, Glens Falls, Greenville, Hudson, Johnstown, New Lebanon, and Queensbury.
Earnings
Berkshire Hills Bancorp on July 24 reported net income of $12 million, or 48 cents a share, in the second quarter, up from $8 million, or 37 cents, in the year-ago quarter. However, core earnings, which strip out merger and systems-conversion expenses, rose only slightly from 47 cents in the second quarter of 2012 to 48 cents in this year’s second quarter, which was below the 55 cents to 56 cents the banking company had previously forecast.
Berkshire issued a news release on July 22 warning that its second-quarter core earnings would fall short of its previous guidance due to a spike in long-term interest rates in the second half of the quarter. The banking company also noted that tightening mortgage-loan volumes and margins, challenged commercial loan and interest-rate swap revenues, as well as higher expenses related to merger integration and efficiency projects played a role.
Berkshire Hills Bancorp currently has about $5.2 billion in total assets and 74 full-service branch offices in Massachusetts, New York, Connecticut, and Vermont, providing personal and business banking, insurance, and wealth-management services. It will have 94 branches after it closes on the deal with Bank of America.
Contact Rombel at arombel@cnybj.com