Berkshire Bank, upon its acquisition of Beacon Federal Bank in East Syracuse, N.Y., will have a footprint that covers an area from Southern Vermont to Central Connecticut, and from Chelmsford to Upstate New York.
That’s a lot of area for a bank based in Pittsfield, but the folks who run Berkshire like to keep things exciting. Its tagline is “America’s most exciting bank,” which hints not only at management’s aggressive acquisition strategy, but also at how grand that strategy may ultimately be.
By assets, Berkshire has nearly doubled in size in the last five years. At the end of 2006, it was a $2.2 billion bank. At the end of the first quarter of this year, it was a $4 billion bank.
When it closes the $132 million Beacon acquisition, it’ll have 10 branches and $1.4 billion in deposits in Upstate New York alone.
The Beacon acquisition comes on the heels of a February announcement that Berkshire was acquiring The Connecticut Bank & Trust Co. of Hartford, Conn., gaining eight branches in Central Connecticut.
David Gonci, Berkshire’s investor relations officer, told Banker & Tradesman that spreading out over such a wide area, while challenging, is simply part of the bank’s long-term plan.
‘A Strong Regional Presence’
The bank doesn’t try to manage its more far-flung operations from Pittsfield. It manages them regionally, Gonci said, and it already has a New York chairman, Bob Curley. The task of expanding further into Upstate New York was made easier by the fact that Berkshire already has a presence in the area. It completed its acquisition of Rome Bancorp – based just to the east of Syracuse – last spring.
“We already have a strong regional presence, and we knew Syracuse was right next door,” Gonci said. “We knew it would be an opportunity in the future. We feel we’re really well positioned.”
At the other end of its territory is Chelmsford, where Beacon – which started life as a credit union for employees of HVAC giant Carrier Corp. – has operations.
Gonci said Berkshire’s first steps into eastern Massachusetts certainly won’t be its last.
“We already do commercial and residential lending in that area,” he said. But he said Berkshire doesn’t “have any specific targets” for de novo branching in its new neighborhoods.
“We want to deepen our footprint, but we don’t set out any specific targets,” he said.
The areas Berkshire has expanded into – namely Upstate New York and Central Connecticut – “were identified a number of years ago for growth into contiguous areas,” Gonci said. “Our people know the area, we’ve done studies of banking markets in New England.”
So far, Berkshire’s expansion has been “well received in the investment community,” Gonci said. “We think we have the right approach.”
The Right Approach
But rapid expansion brings up questions about how the bank will handle its human resources.
“We feel we have the right approach,” Gonci said. He told Banker & Tradesman there will be staffing changes at Beacon and other institutions acquired by Berkshire, but there are “no specific plans in place in that regard.”
“We want to grow long-term,” Gonci said, which means more employees will be necessary. Often, Berkshire offers employees whose positions are being eliminated “other opportunities.”
Nancy Puleo, employment attorney at law firm Posternak, Blankstein & Lund LLP in Boston, said redundancies are part of most any acquisition.
“Most companies go into an acquisition hoping not to let go of staff, but nine times out of 10, it does happen down the road,” Puleo told Banker & Tradesman. Cultures clash, and sometimes acquirers think they should remake an acquired institution from the ground up.
Such an approach can wreak havoc among employees already nervous about the change in ownership. Puleo said “keeping the peace” and “keeping the good people” through retention programs and bonuses tends to work.
But layoffs are the least of the pitfalls for an acquiring institution. It’s a more serious problem if the acquirer tries to use “a one-size-fits-all approach,” Puleo said, or even more dire, isn’t adequately familiar with each state’s employment laws.
“You have to be very proactive in researching employment laws in each state. Become familiar, and make sure you’re in compliance,” Puleo continued. “Walk through the unique challenges. Know where you are operating and know your staff.”
Gonci said it was the familiarity with Beacon that brought about the acquisition in the first place.
“We came to know the Beacon team over the last couple of years, and it’s a quality franchise. We saw an opportunity to put together a partnership.”
