Nitin Mhatre
CEO, Berkshire Bank
Age: 52
Industry experience: 26 years
When Nitin Mhatre finished graduate school, he expected to enter the consumer goods industry, working at a company like Proctor & Gamble. But after a summer internship at Citibank, he ended up spending 13 years at the bank. While his work at Citibank gave him opportunities to learn about banking and live in different parts of the world, Mhatre said he became passionate about community banking during his 12 years at Connecticut-based Webster Bank.
Mhatre joined Boston-based Berkshire Bank as its new CEO in January 2021 following a difficult year where the bank experienced financial losses and the abrupt resignation of its previous leader, Richard Marotta. Mhatre’s first year – which he described as “challenging, inspiring and gratifying” – included the launch in May 2021 of the bank’s plan to turn around its operations and finances, branded the BEST plan, Berkshire’s Exciting Strategic Transformation.
Q: Is there a specific experience during your first year that you will most remember when you look back?
A: Yes, and it wasn’t necessarily the best experience, but certainly the most eye-opening and biggest learning experience. Literally within the first week after I joined, on one hand we had an activist, but more importantly, we had an investor roadshow where I got in front of pretty much all of our existing investors and shareholders who have been holders for a long period of time, along with some of the Wall Street analysts.
It was really interesting to see how concerned they were for us as an institution. It ranged from being concerned and confused or even disappointed at some level. What I liked about the conversation is it really gave me a good flavor as to what the expectations of our investors and communities and analysts were. The good part about this was some of those who knew me from my previous life were also extremely supportive. Their support and confidence meant a lot at that point in time, because it was overwhelming to see how disappointed they were.
Q: What was the biggest challenge you faced during that first year?
A: I would say the exciting part of the challenge, after we addressed the investor concern, was to put together our transformation plan. It was personally very important for me to put that together organically with the teams at Berkshire as opposed to bringing in a consultant to tell us how to build it. It was a challenge because you had to do that in a relatively quick period of time. The great news is the team really stepped up with energy and engagement and passion because everybody believed that this is our time for a comeback. The subset of the challenge is just giving comfort and confidence to everybody that we will be OK – and that’s for the bankers, the customers, the communities and the shareholders. We had to continue to state that message we’ll transform ourselves to become that high performing bank once again and enhance value for all the stakeholders.
Q: How has the BEST initiative affected bank operations?
A: At a macro level, there is a significant change and improvement across what we call the internal key matrix: the financial results, the operational performance, how we live up to our ESG – environmental, social and governance – principles, how are we focused on customer experience and how will we prepare for the future. Also, just the structured thinking around building a roadmap for what we want to be one, two, three years down the line and then working backwards from it has certainly been there.
Then the micro part of it is with the plan comes a lot of initiatives where we say here’s where we will invest more, here’s where we will invest less, and here’s how we do things different operationally. All of that has happened and will continue to happen over the next two three years
Q: How has the BEST initiative shown up in the financial performance?
A: Our return on equity, for example, was two-and-a-half times higher as compared to 2020 in 2021. So that is a significant jump. Our stock value share price went up 70 percent during that timeframe. Our ability to create new revenue streams has been significantly enhanced, while we’re also creating efficiencies by creating opportunities within our operations and real estate and organization structures. And the good news part is we are staying committed to investing all of those efficiency saves into our bankers and our customers and technology.
Q: How will rising interest rates affect Berkshire bank?
A: It will affect it overall positively. Banks are either asset-sensitive or liability-sensitive or neutral. Berkshire is significantly asset-sensitive, which means when the rates start going up, especially if the rate curve steepens, it improves our financial performance significantly. By design, it will also have different implications – positive and negative – for certain businesses. For example, once the rates start going up, the mortgage business slows down. However, the way we built our plan is to keep us relatively insulated from the downsides of the rising environment through partnerships, through digitization, through technology, through automation, so we just believe that overall it’s going to help us and it’s going to accelerate our financial performance improvement.
Q: Have you had to adjust your plan given how quickly the environment seemed to change?
A: If it was apples to apples, and we were kind of the same organization and then the external environment changed, there would be some ups and downs. But in our case, we are in a transformation right now. We even went out to the street and told them that we’re going to hire 40-plus percent more frontline bankers; we’re going to have new partnerships, whether it’s fintech or other companies; we’re going to invest into the digitization of our experience and acquiring customers digitally. All of those foundational elements began last year. Even if there are downdrafts in business like mortgages or small business, we believe we will still show significant growth and, hopefully, growth well about the market averages.
Mhatre’s Five Favorite Books
- “The Wisdom of Finance” by Mihir Desai
- “Factfulness” by Hans Rosling
- “How Will You Measure Your Life” by Clayton Christensen
- The Harry Potter series by J.K. Rowling
- “Sapiens” by Yuval Noah Harari
