Berkshire Bank has completed the sale of its eight New Jersey and Eastern Pennsylvania branches to Investors Bank.
The sale to New Jersey-based Investors Bank was completed on Aug. 27, Berkshire said in an SEC filing today. The banks had agreed to the deal in December.
Berkshire had also announced last week that it is selling its insurance division, Berkshire Insurance Group, to Brown & Brown of Massachusetts.
“The company is targeting that these sale transactions will add to its capital, reduce excess liquidity, and improve its operating efficiency,” Berkshire Bank’s parent company, Berkshire Hills Bancorp, said in an SEC filing today. “They are intended to support Berkshire’s Exciting Strategic Transformation Plan (BEST) by improving focus on key operations and markets, and providing capital to reinvest in profitability enhancement initiatives.”
The company added that it expects the sales and the BEST initiatives to have a positive effect on future annual operating earnings.
The branch sale included all premises and equipment, and Investors also took over branch operations and employment of the staff.
A total of $637 million in deposits and $223 million in loans were assigned to Investors Bank. These had been classified as held for sale in Berkshire’s second quarter financial statements, Berkshire said, and they were not included in total deposits and total loans reported by the bank. Berkshire Bank had total deposits of $9.9 billion and total loans of $7.2 billion as of June 30.
Investors Bank paid a premium of 3 percent of the deposit balance transferred. Berkshire said it expects to record a net gain of approximately $0.22 per share in the third quarter from this transaction. Berkshire also said it is providing a settlement cash payment that is expected to total approximately $400 million as part of the sale for the assumption of covered deposit liabilities by Investors Bank.
Including the $0.55 per share net gain expected from the pending sale of Berkshire Insurance Group, Berkshire said it expects to report a net gain for these two transactions totaling approximately $0.77 per share in the third quarter. Berkshire said it did not expect any material impact to its operating earnings from the branch sale.
The bank added that the branch sale is not expected to affect its Mid-Atlantic specialized commercial lending operations, including lending at its 44 Business Capital Division and its asset-based lending relationships.
Following the sale, Berkshire now has 107 offices in New England and New York. A total of 79 full-time equivalent staff positions have transferred in the branch and insurance division sales, the bank said, noting that it had 1,417 full-time equivalent positions at the end of June.
Investors Bank is in the process of being acquired by Citizens Bank, and the eight branches will become Citizens locations once that transaction is completed, Citizens said in a statement in July.
