Valade: Berkshire Pursued Commonwealth Acquisition
Commonwealth National Bank's president and CEO says the bank was pursued by Berkshire Hills Bancorp Inc. before finally agreeing Wednesday night to a $19.5 million acquisition that brings the number of locally headquartered banks in Worcester to two.
The Commonwealth buy is part of a Berkshire's push to quickly expand its territory, said Charles Valade, Commonwealth's president and CEO. "They have offices in Pittsfield and Springfield, and they've expanded to Albany (N.Y.), and the next logical market for them is Worcester," he said.
Under terms of the stock-based acquisition, CNB Financial Corp., Commonwealth's parent company, will become part of Berkshire Hills. Commonwealth National Bank will become part of Berkshire Bank, the principal subsidiary of Berkshire Hills.
Commonwealth reported $295.2 million in assets for 2008. Once the acquisition is complete, Berkshire expects to claim assets of $3 billion and have 54 offices in Massachusetts, New York and Vermont.
Valade insisted that a 2008 loss didn't make CNB acquisition bait. Instead, the acquisition is the result of a long courtship. "We sold on our strengths not our weaknesses," he said. "The bank has built a nice franchise in the (Worcester) marketplace."
In March, CNB reported a $1.6 million loss for 2008 compared to a profit of $397,000 the previous year. The loss was caused by the sudden worthlessness of Fannie Mae and Freddie Mac stock in CNB's investment portfolio.
Valade praised the bank's employees and said he didn't believe the acquisition would result in job losses in Worcester. Commonwealth has six branches. Valade, who expects to stay on at the bank through the transition and possibly beyond, said Berkshire plans to expand in the Worcester market once the merger is complete.
Earlier this week Commonwealth's CFO William F. Mahoney resigned to join Whitinsville-based Unibank as its CFO, Valade said.
"This is a great opportunity for our customers," Valade said. "Berkshire brings a larger lending limit and now we'll be able to offer that to our customers. They also have wealth management services, which we don't offer," Valade said.
Berkshire and CNB expect to have regulatory and shareholder approval for the deal within five months. They expect to close the deal by late in the third quarter or early in the fourth quarter.
The acquisition would leave Worcester with two locally-headquartered banks: Bay State Savings Bank and Commerce Bank & Trust Co.
After nearly 10 years of local control, Flagship Bank & Trust Co. was acquired in 1996 by Vermont-based Chittenden Corp. At the beginning of last year, Chittenden was acquired by Bridgeport, Conn.-based Peoples United. James Garvey, Flagship's president and CEO, was ousted shortly thereafter.
When it opened in Worcester in 1987, Flagship was the first new bank to open in the city in more than 35 years.
Commonwealth was founded in 2001.
"Twenty years ago you never could have imagined the way the banking landscape looks now," said Brian Thompson, president and CEO of Commerce Bank.
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