Bank Without Boundaries
PHOTO/RICK SAIA
Berkshire Hills Bancorp of Pittsfield — more commonly called Berkshire Bank — will soon move into this building in Westborough as it expands in the region.
As lending institutions work to stay on top in a market of record-low interest rates, plus the expense of new state and federal regulations on banks, MetroWest-based banks and credit unions have spread their wings in and around the region to attract more customers.
The region has seen it recently with St. Mary's Credit Union of Marlborough expanding with a new branch in Westborough, inside a former Friendly's Restaurant on Route 9, and Digital Federal Credit Union of Marlborough is planning new branches in Fitchburg and Lexington in the coming year.
But there's a brand new banking name entering the landscape. Berkshire Hills Bancorp, the Pittsfield-based bank commonly called Berkshire Bank, has moved east and is planning to capture a piece of the consumer business enjoyed historically by locally based competitors.
Leaving Sovereign For Berkshire
Founded in 1846, Berkshire, which today has 74 branches in Massachusetts, Connecticut, Vermont and New York, opened a commercial lending office on Lyman Street in Westborough in December 2011 at a time when its closest location was a lending office in Woburn. James Curran was hired as senior vice president of commercial lending in Westborough. Curran said he and six other colleagues intimately familiar with the Central Massachusetts commercial lending scene left Sovereign Bank (which was renamed Santander beginning this month) in Worcester to get Berkshire off the ground.
“We started at zero,” Curran said. “I can only tell you it's been really successful. We have beaten our original projections handily.”
Though Curran did not reveal the size of Berkshire's loan portfolio in Westborough, the bank has grown that side of the business significantly since the Westborough office opened.
In a summary of its 2012 annual report, Berkshire said new organic loan production increased 20 percent in 2012 compared to 2011, or roughly $500 million, which the bank said corresponded with its expansion into Eastern Massachusetts. The Westborough office, which serves the middle-market, and the asset-based lending office in Woburn, built a combined $400 million commercial loan portfolio by the end of 2012, according to the summary.
Curran believes there's room to boost that even higher, particularly in the area of commercial real estate refinancing. And the opening of the Westborough retail location (also a former Friendly's, in front of the Wal-Mart) on the corner of Route 9 and Otis Street, will maximize the potential for new business, according to Curran.
Westborough A Central Hub
This month, the Berkshire office in Westborough and the bank's mortgage division, Greenpark Mortgage, which has been operating alongside Curran's team on Lyman Street, will move to that new branch location, though Curran said the branch won't actually open to the public until sometime in the first quarter of 2014.
The Westborough branch will serve as a “central hub” of Berkshire's expansion into Central Massachusetts and the MetroWest region, Curran said. The bank, which will offer small business lending services there in addition to consumer banking and commercial lending services, will use it to increase the number of accounts per customer while growing name recognition, and ultimately making way for future expansion. Curran said future branch locations in MetroWest haven't been identified, though a Hopkinton location may be possible. He also mentioned the possibility of expanding into North Central Massachusetts, with a Leominster location.
“Even though we're probably not a very recognizable name today, we are starting to put a lot of feet on the ground to get the Berkshire name out here,” Curran said.
Garvey: Competition 'A Fact Of Life'
What does the local lending community think of the arrival of Berkshire? James Garvey, who became CEO of St. Mary's Credit Union in January, said new competition is “just a fact of life.” Though St. Mary's is continuing to eye future growth eastward toward Framingham and also along the Interstate 495 corridor just as Berkshire is moving in, Garvey doesn't mind a little pressure for a new competitor. He said consumers and folks in his industry appreciate that banks can expand today beyond the regions where their headquarters are located, something that wasn't possible before banks were deregulated in the late 1970s. That allowed them to do business in much larger territories.
“I think for the most part, the consumers and businesses see the benefit of that competition and that's healthy,” Garvey said, adding that St. Mary's certainly won't win every business loan, but will take its fair share despite competitors.
“I wish Berkshire well,” Garvey said.
Bruce Spitzer, director of communications at the Massachusetts Bankers Association, said he can't recall a Western-Massachusetts-based bank that has stretched as far east as Berkshire has recently, but he said it's not surprising that the bank wants to capitalize on the wealth that surrounds Boston.
“They have been in the expansionist mode; they're a well-run bank and they're doing some good things,” Spitzer said.
Berkshire Growimg Elsewhere Too
Meanwhile, Berkshire is leading simultaneous expansion efforts in the Bay State outside MetroWest and Central Massachusetts through the recent acquisition of Beacon Federal Bancorp, based in Syracuse, N.Y., in 2011. Under that deal, Berkshire added a branch in Chelmsford, as well as an asset-based lending office in Burlington and a commercial lending office to serve the North Shore. That same year, Berkshire also acquired Connecticut Bank and Trust Co. of Hartford.
Then, in July, Berkshire announced plans to acquire 20 Bank of America branches, with $640 million in deposits and $5 million in loans, in New York, bringing its footprint to 37 branches in New York and 94 in the Northeast. The deal is subject to regulatory approval yet expected to be complete in the first quarter of 2014.
The Sweet Spot
When it comes down to it, it's really Berkshire's size that's allowed it to expand rapidly since 2011, according to Collyn Gilbert, a New Jersey-based analyst with the firm Keefe Bruyette & Woods. Gilbert said banks with assets of between $2 billion and $5 billion are in a “sweet spot,” because they're large enough to compete with some of the bigger regional banks, but still small enough to be nimble. Gilbert said Berkshire is now trying to scale back its mortgage-lending business, which has become less profitable due to low interest rates, as well as business with one-product customers, and ramp up the bank's bottom line by doing business with people who will hold multiple accounts.
“I think they're trying to get more of a full-relationship type of borrower,” Gilbert said.
Bankers Drawn By Smaller Operation?
But it's not just customers Berkshire will add through expansion. Gilbert said the former Sovereign employees who joined Berkshire to open the Westborough lending office were likely attracted by the opportunity to work under fewer restrictions, and they brought with them their institutional knowledge of the Central Massachusetts and MetroWest market. It's a trend that's becoming more prevalent, said Gilbert, because those working at larger banks are subject to greater regulation and streamlined management, which she said puts a damper on the entrepreneurial spirit.
“I think you're seeing more of those lenders jumping ship from larger banks and going back to smaller banks where they can exercise more of that entrepreneurial authority,” Gilbert said.
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