Berkshire Hills Bancorp to reduce branch footprint by 18%
Berkshire Hills Bancorp (NYSE: BHLB) is selling its eight branches in the Mid-Atlantic region and plans to close and consolidate an additional 16 branches in New England and New York, the company said on Wednesday.
These measures are part of a larger initiative by the Boston-based regional lender to improve core profitability by focusing on efficiency, said interim CEO Sean Gray.
The eight New Jersey and Pennsylvania branches will be sold to Bancorp Investors (NASDAQ: VSI) New Jersey for a premium of 3% of the final deposit balance transferred. These branches had $ 639 million in deposits and $ 308 million in loans.
Investors Bancorp has promised to provide jobs for all current staff at the branches it purchases, and the sale of the branch will have no impact The Berkshire Hills a company specializing in commercial loans in New Jersey and Pennsylvania.
Regarding the 16 branches it is closing, management said it expects to complete the process by mid-2021. Although the company has not disclosed the location of all of these branches, The Boston Business Journal said two will be in western Massachusetts, three in Connecticut and one in upstate New York.
“A thorough review has shown an increasing use of digital channels by our customers,” Gray said of the consolidation.
Once the sales and consolidation operations are completed, Berkshire Hills will have reduced its branch footprint by 18% and no longer have a retail presence in New Jersey and Pennsylvania.
These measures make sense, as Gray said during the third quarter earnings call that the bank is looking to cut annual spending by 10% to 15% by the second half of 2021.
Earlier this year I wrote that I considered the regional bank as a strong candidate for acquisition. The question now is whether management’s real plan is to focus on improving profitability, or if it is actually preparing to sell the rest of the bank.
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