Berkshire Bank CEO Richard Marotta steps down
For the second time in less than two years, a reshuffle has hit the executive suite at Berkshire Bank's parent company.
Richard Marotta, who succeeded longtime chief banker Michael Daly in November 2018, has stepped down as CEO of Berkshire Hills Bancorp, the holding company, as well as leaving the top post at the bank itself.
Marotta also left the company's board of directors "to pursue new opportunities," according to an announcement late Monday from the holding company based in Boston.
Now in charge as acting president and CEO is Sean Gray, who was president and chief operating officer of Berkshire Bank since November 2018 and senior executive vice president of the holding company since 2015. He first joined the bank in 2007 as first vice president of Retail Banking.
Gray has also overseen human resources, marketing, investor relations and facilities and he is president of Berkshire Bank Foundation. Prior to joining Berkshire, he was vice president and consumer market manager at Bank of America in Waltham.
The board of directors will search for a new CEO among candidates from inside and outside the company, including Gray.
Berkshire Hills Bancorp operates 130 Berkshire Bank offices in seven Northeastern states and has about 1,550 employees, according to the company's Dec. 31, 2019, filing with the Securities and Exchange Commission.
"On behalf of the entire Board, we are grateful for Richard's dedication to the Bank during his tenure as CEO and over his entire career of over 10 years with Berkshire," said J. Williar Dunlaevy, the board chairman of Berkshire Hills Bancorp, in a statement. "We have confidence in Sean Gray's leadership ability, and we expect Berkshire to benefit from his deep understanding of the Bank and his commitment to build on Richard's legacy of an inclusive, innovative, and supportive culture."
"Sean has strong relationships across the bank as well as with key external stakeholders and will be supported by a very strong executive management team and a talented group of team members," Dunlaevy added.
In a statement released by Berkshire Hills Bancorp, Marotta wrote that "I am proud to have been part of the leadership team that doubled the size of the bank to $13.1 billion in assets, while overseeing the successful integration of numerous bank acquisitions, and achieving targeted merger efficiencies and market share retention. And as CEO, I am most proud to have established and implemented the Bank's Be FIRST values, making social responsibility an integral component of the Bank's identity as a purpose-driven 21st century community bank."
Asked to describe his plans for further enhancing Berkshire Bank's commitment to workplace inclusiveness and diversity, Gray responded to The Eagle via email that he is "committed to building on Richard Marotta's legacy of an inclusive, innovative, and supportive culture. The bank will continue to support these important initiatives as it moves forward into the future."
There was no further explanation of Marotta's sudden departure, which followed a downbeat earnings report from the bank on July 29. A "goodwill impairment" write-off of $554 million was blamed on COVID-19 because of an overall decline in the value of bank stocks attributed to the pandemic.
An additional $30 million was taken off the books because of credit losses, also related to the coronavirus. One of the largest lenders based in Massachusetts, the bank registered a 13 percent drop in net revenue as of the end of July, compared to the previous year.
Berkshire's stock has lost nearly 70 percent of its value since the beginning of the year, most of it after the pandemic emerged as a national emergency in March. Berkshire Hills Bancorp was trading at $10.61 a share near the close of trading Tuesday, down from a high of $33.72 last December.
When Daly was abruptly replaced by Marotta in November 2018, Gray was elevated from chief operating officer of the bank to president. Daly, 56 at the time, left with a $7.5 million severance package.
During Daly's 16 years of leadership, the bank expanded through multiple acquisitions of smaller banks in neighboring states. A Pittsfield native and graduate of St. Joseph Central High School, Daly had been employed at the bank since 1986. He played a key role in Berkshire Bank's merger with the former Legacy Banks in 2011, a move that made Berkshire the county's largest bank.
An Eagle profile reported that Daly liked to play rock music at meetings, didn't like to wear suits and loved hockey. He also played a prominent role as a community advocate in the Berkshires.
In 2017, during the final full year of Daly's watch, the bank's headquarters was relocated from Pittsfield to State Street in Boston.
According to Boston Business Journal, which first reported this week's reshuffle, analysts have been critical of Berkshire Bank recently. In a note to investors late last month. Keefe Bruyette & Woods analysts Collyn Gilbert and Christopher O'Connell wrote that "this quarter's messy results follow a series of messy quarters for (Berkshire), and the outlook from here, frankly, isn't great."
The analysts also found fault with the bank's turnaround plan. After Marotta became CEO, he decided to sell a mortgage subsidiary and exit other types of lending related to cars and planes. His goals have been to make Berkshire more profitable and focus more on traditional customer relationships within its geographic footprint.
Daly's abrupt departure followed complaints by employees about cultural issues at the bank. Bloomberg News reported on an anonymous letter purportedly written by employees and sent to analysts, several bank insiders, and community members citing a "toxic" workplace culture.
Marotta committed to changes, including greater emphasis on diversity and inclusion. After hiring consultant Malia Lazu to address those issues, he named her Berkshire's regional president for eastern Massachusetts.
As CEO, Marotta launched Reevx Labs, the bank's initiative for investment in local communities to help individuals and small businesses access banking services and capital.
Under Marotta's tenure, "the bank expanded its outreach to diverse communities, achieved greater diversity in its executive and senior management ranks and has been recognized as a leader among its peers in Environmental, Social & Corporate Governance rankings," according to the holding company's statement.
Berkshire Bank was awarded the Top Corporate Steward Citizens award by the U.S. Chamber of Commerce Foundation in 2019 for the small to middle market business category.
Information from Boston Business Journal, Banker and Tradesman, the Boston Globe, Bloomberg News and Eagle archives was included in this report.
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