July 24 - Berkshire Hills Bancorp Inc. (NYSE: BHLB) has announced that its banking subsidiary, Berkshire Bank, has entered into a purchase and assumption agreement to acquire 20 retail bank branches from Bank of America. The branches are located in New York markets which are within or contiguous to markets currently served by Berkshire.
The acquired branches have approximately $640 million in total deposits and $5 million in loans. Both banks will be working closely together to ensure a seamless transition for customer accounts and associates transferring to Berkshire Bank. Berkshire intends to offer continued employment to branch associates who are on staff when the acquisition is completed. This acquisition is subject to regulatory approval from the FDIC and the Commonwealth of Massachusetts and the satisfaction of customary closing conditions. The acquisition is expected to be completed in the first quarter of 2014.
The 20 branches will increase Berkshire's total branch count to 94 branches in its footprint, and its New York branch count will more than double to 37 branches. Berkshire has $5.2 billion in assets and is one of the leading regional banks in its Northeastern markets. As America's Most Exciting Bank, Berkshire Bank is well positioned to integrate the new branches into its existing operations and deliver the product depth and local responsiveness that have brought it success in all of its markets.
Berkshire CEO Michael Daly stated, "We are pleased to welcome these new customers and communities to Berkshire Bank. We look forward to servicing their banking, insurance, and wealth management needs and to providing our full suite of personal and commercial deposit and loan products. We believe that our existing customers and these new customers will value the enhanced convenience of our expanded New York branch network as well as our active community support and the additional resources provided through our New York regional headquarters."
Daly continued, "This transaction meets our financial criteria and is expected to contribute to our long term strategic and financial goals. We plan to utilize the acquired deposit funds to replace certain existing higher-cost deposits and borrowings, along with providing additional core funding to support future growth. We expect that the acquired operations will be immediately accretive to core earnings per share and that incremental earnings will provide a payback to tangible book value per share within four to five years. We expect our capital ratios to remain healthy, with tangible common equity targeted to exceed 7.5 percent of tangible assets at closing without any additional capital required to fund the purchase. Importantly, our liquidity and interest rate sensitivity metrics will benefit from these additional core funding sources. We have invested in technology systems and other infrastructure to position ourselves for future growth and this acquisition allows us to leverage those investments. We believe that this transaction will improve the quality and value of our franchise and it is consistent with the combination of acquisition and organic growth strategies that have supported our earnings growth in recent years."