Berkshire Bank Acquisition of Hampden Bank Becomes Official

Mike Daly

Mike Daly says the affiliation of Berkshire Bank and Hampden Bank is a marriage of similar cultures.

Berkshire Bank’s acquisition of Hampden Bank, which closed in April, will position the Pittsfield-based institution as the fifth-largest bank in the region in deposit market share. But Michael Daly said it’s more than a growth opportunity; it’s a marriage of cultures.

“We’re careful in selecting partners; we don’t acquire just to do acquisitions,” said Daly, Berkshire Bank’s president and CEO. “We have a set of core competencies here, and we look to develop relationships with companies that have the same core competencies and beliefs. We want to determine whether or not we can, as partners, make a bigger impact with what we do.”

Earlier this year, Berkshire Hills Bancorp and Hampden Bancorp signed a definitive merger agreement under which Berkshire acquires Hampden in an all-stock transaction valued at approximately $109 million. The deal, which recently received all necessary regulatory approvals, increases Berkshire’s total assets to $7.1 billion, including the $706 million in acquired Hampden assets.

Daly said the in-market merger will create efficiencies while expanding Berkshire’s market share, particularly in the Springfield area. “It’s always easier when you partner with someone in a market where you already operate, where you already know the lay of the land and have some commonality with the customer base and commercial lenders; those things are always very important,” Daly told BusinessWest, adding that the merger complements the bank’s recent expansion initiatives in Central Massachusetts and Hartford.

“Our acquisition growth is a result, not a cause,” he added. “When we do well organizationally in communities where we have a presence, and the bank continues to do well, we become a viable partner with other companies all around New England and New York who are looking for a cultural fit like the one we provide. We continue to operate on a day-to-day basis and do the best we can in our communities, and when an opportunity to partner with somebody arises and the cultural fit is good, we’ll act on that.”

Making Change

Berkshire’s acquisition of Springfield-based Hampden Bank means that, for the first time in generations, no bank will be headquartered in the City of Homes. But Berkshire leaders say customers and the community will both benefit from the merger.

Specifically, Hampden operates 10 branches in the Greater Springfield area and reported $508 million in net loans and $490 million in deposits as of Sept. 30, 2014. Berkshire operates 11 branches with $627 million in deposits in the same market area. Three branches — 977 Boston Road, Springfield; Tower Square, Springfield; and 475 Longmeadow St., Longmeadow — will close due to overlapping footprints.

“We have increased our branch count in the area to 18, and that starts to become the type of density that you need in order to serve an area. Increasing the number of branches is important,” Daly said. “Yes, we will have some overlapping branches, and three branches will close. But taking care of employees is one of the most important, if not the most important, thing for us. So we’ve actually been able to ensure that 100% of the people in those branches will have jobs in the company.”

When the merger was announced last fall, Hampden had 126 employees, and Sean Gray, Berkshire Bank’s vice president of retail sales, told BusinessWest that the organization’s priority was to make sure they all kept their jobs or similar positions, citing the bank’s acquisition of Legacy Bancorp in 2010, when it was able to do the same with the vast majority of that institution’s employees.

“People like to find fault with a bigger company,” Daly said. “But that’s one of the benefits of a bigger company — we have a lot of opportunities.”

Meanwhile, he hopes Hampden customers see very little impact on their day-to-day interactions with the bank, both now and when new signage and branding starts to emerge next month.

“Hopefully, as we’ve seen in other successful partnerships, there will be a positive impact on customers. They will see little change in who they deal with; they’ll still see the same faces in the branches they visit,” he noted, adding that they will enjoy what amounts to their current set of services “on steroids.”

“We’ll be able to bring a significantly more diverse and broader product set than the one they had when dealing with Hampden, in areas like insurance, wealth management, mortgage products, and consumer loan programs,” he said. “The only impact on customers ought to be a positive one.”

Allie O’Rourke, Berkshire’s vice president of investor relations, told BusinessWest that conversions to expanded product offerings are ongoing. “We’re working to introduce new products and service offerings, and enhance the customer experience, even though most of the branding won’t happen until June.”

BerkshireBankLOGODaly added that, while Hampden has done a “great job” in the commercial-lending arena, larger loans have sometimes proven difficult. “This gives them an opportunity to play in a bigger space.”

Specifically, he added, “as we talk about our commercial presence in the area, we’re now the number-one SBA lender in Western Massachusetts. We continue to push that hard and provide opportunities in the Springfield area, where small-business lending is so critical.”

Helping small businesses grow, he went on, is important to a city on the rebound — and he believes Springfield is certainly that. “A lot of people don’t believe Springfield can come back to where it was at one point. I’m not one of those people. I believe it can, and I want to be a part of what’s happening. There are issues in the Springfield area, but if everyone pulls in the same direction, Springfield could become an economic hub again.”

Size and Scope

While recognizing the value of community banks in Western Mass., Daly also makes an argument for banks with size and reach — and believes Berkshire can be both.

“The industry will continue to see consolidation because smaller banks have a more difficult time dealing with the additional costs that have come to bear in order to stay in business,” he said, noting that regulatory oversight, and the resources necessary to meet new reporting mandates, have both grown significantly since the financial crisis of 2008.

But he also emphasized Berkshire’s civic role, noting that Berkshire, like Hampden, boasts a culture of community involvement through both donations — $269,852 since 2013 — and employee volunteerism. Ray Smith, Berkshire’s assistant vice president of marketing, said “decisions about which local organizations to support, through grants and sponsorships, will be made by local committtees.”

In addition, “Berkshire Bank pays its employees for two full days of volunteer work in the community,” O’Rourke said, a figure that totaled 50,000 volunteer hours last year alone. “Hampden Bank employees will have that now.”

It’s one more example, Daly said, of how the two organizations match in terms of values and culture.

“They are a company that cares very deeply about its employees, cares very deeply about the communities that they’re in. They do everything they can to provide a high level of customer service. Those things are attractive to us — they are things that we also concentrate on. They are right up our alley.

“People ask us whether our shareholders believe the deals we do are good deals,” Daly went on. “I always say, if we deal with companies that share the values we do, companies that make a commitment to the community, our shareholders always benefit. This is one of those deals, and we’re excited about it.”


Joseph Bednar can be reached at [email protected]

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