Despite losses that have left Boston-based Berkshire Bank needing regulatory approval for shareholder dividends, the bank said it remains committed to Richard Marotta’s strategy for growing the bank, including his diversity and equity initiatives.
Marotta stepped down as Berkshire Bank’s CEO on Monday, according to a statement from the bank, to “pursue new opportunities.” After joining Berkshire Bank 10 years ago, Marotta spent less than two years as CEO. He had taken on the role in November 2018 after Michael Daly resigned.
Berkshire Bank’s current president, Sean Gray, will serve as acting CEO. Berkshire’s board of directors said it would begin a CEO search and consider both internal and external candidates, including Gray.
The pandemic has contributed to significant losses this year at Berkshire, which has about $13 billion in total assets. A $554 million goodwill impairment charge led to a $549 million loss in the second quarter. Marotta said during the bank’s second quarter earnings call last month that the accumulation of goodwill was due to the bank’s acquisition-focused strategy under Daly, as six mergers in 10 years expanded the bank’s footprint in the Northeast.
With most bank stocks trading lower due to the pandemic-induced recession, including Berkshire’s, Marotta said the bank was forced to write off all goodwill from these mergers. He added that the write-off was unrelated to the bank’s performance.
Berkshire also saw a net loss of $19.9 million in the first quarter, attributed to loan loss provisions and implementation of the new current expected credit loss (CECL) methodology.
Because of the 2020 losses, Berkshire must now receive approval from the Massachusetts Division of Banks for future shareholder dividends, as well as a nonobjection from the Federal Reserve Bank of Boston.
Jamie Moses, Berkshire’s chief financial officer, said in response to an analyst’s question during the recent earnings call that the bank would take a holistic approach when deciding whether to pay future dividends, including looking at capital generated and loans charged off due to the pandemic.
Berkshire Bank has been visible in the Greater Boston area during both the pandemic and the protests against racial inequality following the death of George Floyd. Marotta’s growth strategy had included diversity and inclusion initiatives to help increase market share within the bank’s existing footprint.
Marotta had introduced a corporate social responsibility program at Berkshire, known as Be FIRST. He also led the opening of Reevx Labs, a co-working space that provides community resources and financial education. Reevx Labs recently launched an online portal in partnership with the Boston Public Library’s Kirstein Business Library & Innovation Center to give small business owners, nonprofits and artists access to the library’s business resources and staff.
Berkshire Bank confirmed to Banker & Tradesman through a spokesperson that the leadership change would not affect the bank’s strategy.
“Sean Gray is committed to building on Richard Marotta’s legacy of an inclusive, innovative and supportive culture,” Berkshire said in an email. “He fully supports Berkshire’s current strategy, including the Be FIRST values and Reevx Labs to ensure that the bank continues to address the unmet needs of underserved individuals and small businesses in local communities.”
Malia Lazu will remain as Berkshire’s Greater Boston regional president, Berkshire said. Known for her work as a community organizer, Lazu was hired by Marotta last year as executive vice president and chief culture and experience officer to help him turn around the company’s culture after employees complained of a “toxic” environment under previous CEO Michael Daly. He later named her regional president.
Lazu was active in Berkshire Bank’s efforts to help small business owners of color gain access to the Paycheck Protection Program, and she also hosted through Reevx Labs a series of online townhall meetings addressing racism.
