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Regulatory action on Beacon Federal has no effect on acquisition
SYRACUSE — A report from a federal regulator of unsafe banking practices at Beacon Federal has no effect on its pending acquisition by Berkshire Hills Bancorp, Inc. (NASDAQ: BHLB), according to both banks. DeWitt–based Beacon Federal and the federal Office of the Comptroller of the Currency (OCC) signed an agreement earlier this month outlining the […]
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SYRACUSE — A report from a federal regulator of unsafe banking practices at Beacon Federal has no effect on its pending acquisition by Berkshire Hills Bancorp, Inc. (NASDAQ: BHLB), according to both banks.
DeWitt–based Beacon Federal and the federal Office of the Comptroller of the Currency (OCC) signed an agreement earlier this month outlining the steps the bank must take to address the issues the regulator found. But the acquisition is moving ahead and is expected to close in the fourth quarter this year, Beacon President and CEO Ross Prossner says.
Massachusetts–based Berkshire Hills announced plans in May to acquire Beacon Federal’s holding company, Beacon Federal Bancorp, Inc. (NASDAQ: BFED), in a $132 million deal.
Beacon Federal has total assets of $1 billion and branches in DeWitt, Marcy, and Rome; Smartt and Smyrna, Tenn.; and Chelmsford, Mass. A subsidiary, Beacon Comprehensive Services Corp., provides investments, insurance, tax preparation.
Berkshire Hills released a statement noting that its staff performed thorough due diligence on Beacon leading up to the acquisition agreement. The statement also said the company’s goal remains to close the deal in the fourth quarter.
“Berkshire looks forward to completing the acquisition in accordance with the merger agreement and looks forward to expanding our business in this region and in the Syracuse market,” the statement said.
Documents filed July 18 with the U.S. Securities and Exchange Commission outlined the OCC agreement with Beacon Federal. The regulator found “unsafe and unsound” banking practices at Beacon Federal, according to the filings, but the documents did not discuss the details.
Among other things, Beacon Federal agreed to implement a three-year business plan and review the qualifications of all its senior executive officers.
The bank must also establish new risk-management practices, diversify its assets, improve internal controls on its commercial-lending activities, and review and revise its loan policy. In addition, the regulator imposed specific capital requirements on the bank.
The agreement stems from an OCC examination that began last October, Prossner says. It was the first for the bank with the OCC, he adds.
Beacon Federal’s previous regulator, the Office of Thrift Supervision (OTS), was merged into the OCC by the Dodd-Frank financial reform legislation of 2010.
“With the OCC, it was just a different kind of exam with different examiners,” Prossner says. “It was a new experience.”
The bank had a good relationship with the OTS, he says. Both bank and regulator knew what to expect of each other, he adds.
A number of the issues raised by the OCC stemmed from differences in how it looked at Beacon Federal compared with the OTS, Prossner says. He says many of the items outlined in the agreement have already been addressed and the bank is well on its way to dealing with others.
Beacon Federal is already in compliance with the agreement’s capital requirements, Prossner says. The bank must maintain minimum tier-one capital of at least 9 percent of its adjusted total assets, according to the SEC filing.
The bank’s current tier-one capital level is 10.9 percent and the level was above 10 percent throughout the OCC exam, Prossner says.
He also notes that while the agreement forbids dividend payments or other capital distributions without OCC approval, that measure actually refers to payments from the bank to its holding company.
Beacon Federal Bancorp already has enough money in place to pay dividends to shareholders through the end of 2013, Prossner says.
Beacon Federal learns something from every regulatory exam it undergoes, Prossner adds, and this one was no different, but he declined to discuss specific items.
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NBT Bancorp profit dips nearly 10 percent in Q2
NORWICH — Profit fell almost 10 percent at NBT Bancorp, Inc. (NASDAQ: NBTB) in the second quarter as the banking company continued its growth strategy through mergers and acquisitions. NBT reported second-quarter net income of $13.3 million, down by $1.4 million, or 9.5 percent, from the year-ago period. Earnings per share (EPS) fell to 40
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NORWICH — Profit fell almost 10 percent at NBT Bancorp, Inc. (NASDAQ: NBTB) in the second quarter as the banking company continued its growth strategy through mergers and acquisitions.
NBT reported second-quarter net income of $13.3 million, down by $1.4 million, or 9.5 percent, from the year-ago period. Earnings per share (EPS) fell to 40 cents from 43 cents a year earlier. The company’s EPS would have been 42 cents in the second quarter if not for 2 cents per share, or $800,000 total, in merger costs during the quarter. NBT closed on its acquisition of Hampshire First Bank on June 8 and now operates five branches in southern New Hampshire.
NBT’s earnings beat analysts’ estimates of 37 cents per share, according to Bloomberg.com data. NBT reported its profit report July 23 after market close. NBT’s stock opened up 13 cents at $20.87 on the morning of July 24, before closing at $20.54, a loss of 20 cents, or 1 percent, on the day. Through July 25, NBT’s stock has declined 7.2 percent so far this year.
“During the second quarter, we continued to demonstrate commitment to strategic investment in our company’s future with extension of our footprint into a fifth state through the successful acquisition of Hampshire First Bank in southern New Hampshire,” NBT President and CEO Martin Dietrich said in the earnings report. “We are also encouraged by our strong loan growth during the first half of 2012, both organic and from our acquisition of Hampshire First Bank.” Strong commercial and consumer loan originations spurred the loan growth, he said. The average balance of loans and leases for the three months ended June 30, 2012, was $3.9 billion, up about 8 percent from the quarter ending June 30, 2011.
NBT reported a $4.1 million provision for loan and lease losses during the second quarter, down from just over
$6 million a year ago. Its net charge-offs of loans fell to $4.7 million in this year’s second quarter, from $5.5 million in the second quarter of 2011, driven by general improvement in its asset-quality indicators, NBT said.
Net-interest income decreased slightly from $50.2 million a year ago to $49.8 million in this year’s second quarter. Non-interest income rose 4.1 percent to $20.7 million in this year’s second quarter as insurance and other financial-services revenue increased $300,000 as the company benefitted from an insurance-agency acquisition it made in May 2011.
Non-interest expense rose 9.8 percent to $47.4 million in this year’s second quarter compared to a year ago, primarily due to a $1 million increase in salaries and employee benefits and $800,000 in merger-related costs, NBT said.
NBT had total assets of about $6 billion on June 30, 2012, up 6.6 percent from Dec. 31, 2011. Loans and leases were $4.2 billion at the midway point of the year, up by $361 million from 2011 year-end. Total deposits were $4.7 billion on June 30, up by $321.8 million on Dec. 31.
NBT’s board of directors declared a third-quarter cash dividend of 20 cents per share, payable Sept. 15 to shareholders of record as of Sept. 1.
Headquartered in Norwich, NBT Bancorp (www.nbtbancorp.com) is a financial holding company that operates 132 NBT Bank, N.A. locations and 35 Pennstar Bank branches; EPIC Advisors, Inc., a Rochester–based 401(k) plan recordkeeping firm; and Mang Insurance Agency, LLC, a Norwich-based insurance agency.
Stay up-to-date on the companies, people and issues that impact businesses in Syracuse, Central New York and beyond.