PITTSFIELD -- Berkshire County's largest bank is expanding again, its latest move to intentionally bolster the bank's already prominent presence in New York state.
Berkshire Hills Bancorp, Berkshire Bank's holding company, has entered into a "purchase and assumption agreement" to acquire 20 retail bank branches from Bank of America that are located in eastern and central New York.
The $14.4 million transaction is subject to regulatory approval by both the state of Massachusetts and the Federal Deposit Insurance Commission, along with the satisfaction of customary closing conditions. The acquisition is expected to be finalized by the first quarter of 2014.
The purchase price was determined through a 2.25 percent deposit premium that Berkshire received on the combined $640 million in assets that are held by the 20 Bank of America branches, said Berkshire spokesman Ray Smith. The 20 branches also have $5 million in loans.
They are located in eight New York counties, and are all either within or contiguous to markets that Berkshire Bank currently serves. Geographically, the branches run from Columbia County north to Washington County, and west to Oneida County. The closest branches to the Berkshires are located in New Lebanon and Chatham, N.Y.
Tamy Gunsch, Berkshire's senior vice president of retail banking, said the acquisition is intended to strengthen the bank's footprint along the Interstate 90 corridor. Recent Berkshire acquisitions have extended the bank's coverage area into eastern Massachusetts along the Massachusetts Turnpike, and west along the New York State Thruway into the Syracuse, N.Y. area.
"You can't be in all places, but if you take a look at our branches that go from Berkshire County into (New York's) Capital Region there were some gaps that we were missing," Gunsch said. "In central New York, we added more branches in the Utica area, so it made sense for us to grow the market share, acquire new customers, and be more convenient to our existing customers."
"This transaction meets our financial criteria and is expected to contribute to our long- term strategic and financial goals," said Berkshire Bank President and CEO Michael P. Daly in a statement.
Of the 180 banks that are located in Massachusetts, Berkshire is one of only 20 that are publicly traded, according to the Massachusetts Bankers Association. Being in that situation gives Berkshire the financial flexibility to pursue transactions that many other financial institutions in Massachusetts cannot.
The acquisition will increase the number of Berkshire Bank's retail branches in New York state from 27 to 47, and it expands the bank's total number of branches in five states from 74 to 94. Berkshire has $5.2 billion in assets, and now operates more branches in New York than anywhere else. Of Berkshire's 27 existing branches in New York, 18 are located in the Capital Region, and nine in Central New York.
The bank's second quarter results will be released today, and more information about the acquisition is expected to be discussed at 10 a.m. during a conference call with investors.
Berkshire began expanding into central New York two years ago when it acquired financial institutions centered in the Rome/Utica market in 2011 and in Syracuse last year.
Four of the Bank of America branches are located in Utica, while two others are in Rome. Acquisition of the 20 branches increases Berkshire's market share in central New York from 5 to 8 percent.
Both Rome Bancorp and Beacon Federal were absorbed into Berkshire Bank once those acquisitions received final regulatory approval. Bank of America is leaving the counties where Berkshire is buying the 20 branches. The new branches will all be operated under the Berkshire Bank name.
Berkshire is expected to offer continued employment to any branch associates who are on staff when the acquisition is completed.
Bank of America is one of the world's largest financial institutions. It serves approximately 51 million consumer and small business relationships through 5,300 retail banking offices. A telephone call to Bank of America's media relations department seeking comment was not returned.
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Acquisition at a glance
Berkshire Bank (current):
Assets: $5.2 billion
Service area: Connecticut, New York, Massachusetts, Tennessee, Vermont.
Bank of America branches involved:
Location: Eastern and Central New York.
Assets: $640 million (combined)