The Middletown Press (Middletown, CT)
Berkshire Bank seeks to close three Connecticut branches
Officials with Boston-based Berkshire Bank have notified Connecticut banking regulators that they want to close three Connecticut branches by the end of June.
Officials with the Connecticut Department of Banking said this week that Berkshire Bank filed its branch closure request on April 22. The bank is seeking to close its branches in Tolland, Killingly and a branch in St. Francis Hospital in Hartford on June 28.
Officials with Berkshire Bank did not respond to requests for comment regarding the proposed closures on Wednesday.
If the closures are approved by Connecticut regulators, it would leave Berkshire Bank with 18 branches in the state. The vast majority of those branches are located east of the Connecticut River.
News of the proposed branch closures comes a little more than a month after Berkshire Bank officials announced plans to sell off 10 of its branches in the Albany and Syracuse, N.Y. areas to a pair of banks and a credit union. The sale of the New York branches reduced the number of locations that Berkshire Bank has from 96 to 86.
Berkshire Bank entered the Connecticut banking marketplace in 2012 when it acquired Connecticut Bank and Trust Co., which was a $280 million bank with eight branches when the deal was made. Berkshire Bank expanded its Connecticut presence even further seven years later when it acquired Willimantic-based Savings Institute Bank and Trust Co.
In addition to its Connecticut presence, Berkshire Bank has branches in Massachusetts, Vermont, New York, and Rhode Island.
Berkshire Bank’s proposed closures follow a growing trend of banks in Connecticut reducing their branch networks. Since the start of 2019, approximately 200 branches have closed in Connecticut.
John Carusone, president of the Hartford-based Bank Analysis Center consulting firm, said the branch sales and proposed closures signal that the bank’s management team “is trying to improve the effectiveness and efficiency of the Bank’s branch distribution system.”
“Berkshire Bank has long been viewed as a well-managed, well capitalized, and profitable bank,” Carusone said. “Their year-to-year performance metrics look quite impressive. Nonetheless, there appear to be a few potential problem areas associated with the current stagflation economy that are doubtfully weighing on management.”
The provision for potential loan losses nearly tripled from $12 million to $32 million between 2022 and 2023, he said. And the cost of deposits went up almost by a factor of five while deposits were almost flat during the same period, even as profits declined by about 25 percent between 2022 and 2023.
Carusone said about 33 percent of Berkshire Bank’s loan portfolio is in commercial real estate loans, most of which is non-owner occupied.
“The present economy is not forgiving of an institution with an overweight in commercial real estate,.” he said. “As far as I’m concerned, 33 percent is definitely pushing it. Going forward, management may be anticipating increasing level of non-performing loans.”