Fresh from a recent initial public offering of stock that was a sellout, Berkshire Bank is ready to take advantage of any opportunities for physical and financial growth.

Berkshire Bank, part of Berkshire Hills Bancorp, converted to a publicly owned stock holding company at the end of June. The stock was initially offered at $10 a share with a minimum subscription of $250. The minimum number of shares to be sold was 6.15 million and the maximum, 8.31 million. The bank, however, received orders for 10.89 million shares.

“We were very pleased with the outcome of the IPO in terms of the amount of interest showed,” said bank CEO and President James A. Cunningham Jr. “The next step is to implement our business plan.”

Berkshire Bank, the largest financial institution in Western Massachusetts, will be looking at various ways to do that, continuing to grow “organically” as its capital grows, according to Cunningham. Though he said the bank has no specific goals or acquisition targets on which to focus its added capital, Cunningham did list several areas where the now-public Berkshire Bank is ready to branch out, literally and otherwise.

“We will be looking at new products and services, such as developing an insurance product, for example,” Cunningham said. “And we’ll be looking at branching or acquisition opportunities as they become available, though we have nothing definite planned.”

Another goal involves better management of expenses, Cunningham continued.

“We’ll clearly look at [expenses] under a little different light than we once did,” he said.

The bank will also examine its capital management strategies much more closely than previously. According to Cunningham, the bank is currently “significantly overcapitalized,” in the neighborhood of 15 percent equity.

“We know we need to work that down, and we believe our investors will provide us with the opportunity to do that,” said Cunningham.

Beyond all of these new issues to examine and explore, one of the top priorities of the bank is to remain an independent institution. As a mutual bank, Berkshire Bank was owned by depositors, and could not be bought or sold. But as a stock bank, owned by shareholders, the bank can decide to acquire other banks, or decide to sell.

“There are some issues that come along with [being public]. We really do want to remain independent. But we felt like it was in the organization’s best interest to go public,” Cunningham said.

“We understand that, as a public company, we have some obligation to consider alternatives if they are proposed to us. Obviously we have to do that,” Cunningham added. “But there’s nothing other than that we can do. There are no substantial protections in place to guarantee our independence. The only way to have any kind of guarantee of independence is to provide our investors with good returns.”

Forging Ahead
The decision and process of converting to a stock institution actually began in late 1998, when Cunningham and the bank’s board of directors began thinking about the idea. They spent a year evaluating their choices, with an eye to the future.

“As we went through the process, the board and I developed the position that it was in our organization’s best interest, as we looked to the future, to go ahead with this, and that it would allow more flexible growth five to 10 years from now,” said Cunningham.

“Running as a mutual company limited our potential … because we’re growing in size and market area. We figured that, if we didn’t make the decision, we might well end up with stymied growth from that standpoint,” he added.

The timing of the IPO was simply a factor of when the board actually voted to move ahead, and had nothing to do with any particular strategy, said Cunningham.

Since last fall, many financial institutions have seen their stocks fail to command the prices they once did, especially with investor attention and activity centering on tech stocks. Such market conditions, with loss in value, can make banks vulnerable to takeovers. But Berkshire Bank went through with its decision anyway.

“It really wasn’t a concern. We can’t do much about market timing-type scenarios,” Cunningham said.

Though the bank recently issued its first quarterly earnings report since the IPO, Cunningham stressed that those numbers are insignificant in so short a time period (the bank converted on June 27; the quarter ended June 30). The bank incurred a loss because of its one-time donation of $5.7 million of company stock to the charitable institution it founded in June, the Berkshire Hills Foundation.

The fall report, which will encompass a full quarter, will be more meaningful, Cunningham promised.

The company boasts a strong loan-to-asset ratio, close to 80 percent.

“That’s fairly high, and I think that’s one of our strengths. We’ve been able to grow considerably during the last several years, due primarily to growth in the consumer and commercial area,” Cunningham said, adding that the bank has a “reasonably sized” commercial department, another plus for the institution.

“Even though we’re a thrift, our balance sheet looks a little more like a commercial balance sheet,” said Cunningham.

Established in 1846, for more than a century Berkshire Bank operated as a depositor-held mutual bank. It is now the largest financial institution in Berkshire County and in all of Western Massachusetts, with headquarters in Pittsfield and 11 branch offices throughout the Berkshires. The bank also serves residents and businesses in nearby Eastern New York, Northern Connecticut and Southern Vermont.

In the summer of 1998, the bank purchased the last three remaining Fleet offices in Berkshire County. BankBoston also left the area. Customer service is the key to success, as evidenced by the fate of the two big banks’ Western Massachusetts branches, said Cunningham.

“We don’t have any large money-center bank here any longer. They typically just weren’t doing as good of a job,” Cunningham said, referring to community-bank-style customer service. “Now we simply compete with the other good institutions here.”

“We do think that customer service, then and now, is critical,” he said. “And I think we need to do an even better job.”

With a brand new set of priorities, what does Cunningham see in the bank’s future?

“I think the bank will continue to grow and expand into other areas such as insurance and the sale of insurance products,” Cunningham predicted. “I think it will continue to grow both within the county, and, within five years, we will probably have operations outside of Berkshire County.”