The surge is over, at least for now.
Three years after Berkshire Bank launched an aggressive retail branch expansion in the Capital Region, the Pittsfield, Mass. bank is falling short of its initial projections.
In 2005, Berkshire opened its first retail branch in downtown Albany. A second was fast to follow in Clifton Park. The bank’s 10th area office opened last April in Glenville. But since then, Berkshire’s Capital Region branch expansion has slowed to a crawl.
The expansion has been bogged down largely by competitive pricing pressures on loans and deposits and an adverse interest rate environment. Those factors have extended the amount of time it takes new offices to become profitable. The bank’s first Albany area office achieved profitability last year, and half of its area branches should reach that level by the end of 2008, said Berkshire Chief Finance Officer David Gonci.
At a New York City investors’ conference in December 2005, bank parent Berkshire Hills Bancorp said it planned to have 21 branches in the New York, according to presentation slides. Berkshire President and Chief Executive Officer Michael Daly said in a Friday conference call that Berkshire has no commitments for new offices in 2008, though it is looking to fill in gaps in its footprint.
“There are things that do change with the passage of time,” said Gonci.
At a time when the nation is teetering on a recession, a growing number of banks are curtailing their branch growth plans, most notably Citigroup and smaller financial institutions in the housing slump-battered Florida. Despite Berkshire’s slowdown in Albany area branch openings, the bank managed to report a 20 percent net increase income to a record $13.5 million. Daly said the bank should also see record earnings in 2008.
“We certainly expect more branches there, and that includes 2009 and beyond,” Gonci said of the Capital Region.