🔒Market Jump: Berkshire Bank begins southern Connecticut expansion

Noting the potential for business in the region, Massachusetts-based Berkshire Bank has moved into the southern Connecticut market.

The bank recently established its first location in the area, a loan production office at District New Haven, at 470 James St.

The $12.3 billion bank’s Connecticut presence has previously been clustered in the central and northern portions of the state, with 25 local branches/ATMs in towns such as Farmington, Simsbury, West Hartford, Rocky Hill, Hartford, Glastonbury, South Windsor, East Hampton, Enfield, Hebron and Colchester. Overall, it has 108 locations in New England and New York.

To shepherd its expansion efforts, the bank in August hired longtime area banker Jeffrey Klaus as its new senior vice president, regional president and middle market team leader for southern Connecticut.

Klaus, who has three decades of experience in the banking industry, most recently as regional president at Webster Bank, is now based in Berkshire’s new office at District.

“Southern Connecticut probably has the highest potential for bank expansion, both from a consumer standpoint and a business standpoint, in the state,” Klaus said.

Berkshire Bank CEO Nitin Mhatre, who has been at the bank since January, said Klaus will “play a critical role” in expanding the Berkshire brand and client portfolio in southern Connecticut.

“We have existing business relationships in southern Connecticut and are looking to expand our offerings in this growing market,” Mhatre said.

Klaus’ marching orders are to secure new business, manage commercial banking relationships, and build community connections in the market.

During his career, he has worked as a regional president for various banks, including Bank of America and Fleet Bank, specifically in charge of their presence in Greater New Haven.

Klaus said his arrival at Berkshire is just one way the bank plans to expand in the region, due to his familiarity with the people and businesses here.

“I am somebody who knows a lot of the fabric of Greater New Haven. One of my large roles is really to network and to put people together. I am going to make a lot of introductions. That is the way we are going to get the bank invested, through my knowledge of the market,” said Klaus, who just finished a stint as chair of the Greater New Haven Chamber of Commerce and plans to focus on small business clients.

Hub of activity

Berkshire will be the only bank at District New Haven. Its new neighbors include AdvanceCT, a nonprofit focused on boosting the state’s businesses and economy, and dozens of small businesses incubating there.

As of late November, Berkshire had signed the lease at District and was putting finishing touches on its office space, which will host about a dozen bankers.

“It is a vibrant place with all sorts of great business activity,” Klaus said of District New Haven. “I think it is the hub of New Haven. And New Haven I consider to be the hub of business activity. So we can’t think of a better place to be.”

Berkshire’s office area features four desks, where professionals across the bank's lines of business, from commercial to small business, wealth management, private and retail banking, will meet with clients. There are several conference rooms for meetings too.

“It is a way to jump off into the market and into New Haven,” Klaus said. “We are expanding. We want to grow. We have been very public about that.”

He has hired one person on the commercial team to assist him with middle market banking. Several bankers on the small business side have already started to schedule time to be in New Haven. Berkshire is calling and meeting businesses in the region and starting to make loans, Klaus said. The bank helped finance tenant improvements at District for AdvanceCT, he said.

Berkshire Bank has seen an opportunity also because some large banks already in the market are merging, Klaus noted.

New York's M&T Bank Corp. is buying Bridgeport-based People’s United Bank in a $7.6 billion deal. Waterbury-based Webster Bank is merging with New York’s Sterling Bancorp, a deal valued at $10.3 billion.

“I have been through about five or six mergers in my career, and they can be very disruptive for clients,” Klaus said. “What we are going to do is focus on people who feel their bank is getting a little too big, or they are being ignored because of consolidations.”

Brick and mortar vs. digital

Klaus said he’s unsure how many branches Berkshire Bank will open in southern Connecticut, but the lender’s overall strategy is to trim its brick-and-mortar footprint. In Dec. 2020, the bank announced it would close 18 percent of its branches due to customers’ digital banking habits.

“We are not going to have a traditional branch growth strategy,” Klaus said. “That has to do with a conversion and a transition into digital banking, which every bank is doing to some extent.”

However, as the bank grows its customer base in the New Haven and southern Connecticut region, more physical locations may come, Klaus said.

Additionally, if a small bank was selling a couple of branches in a market Berkshire wants to be in, it might move toward pursuing them, he said.

The digital shift is an answer to customers’ choices on how they want to do their banking, he noted. Over the past decade, customers have transitioned to digital banking platforms, and that trend is expected to continue.

The bank has responded with tools such as MyBanker, in which customers get their own personal banker who meets with them wherever they’d like, even at their home or work, to discuss credit cards, mortgages, or any financial product or service. Bankers help fill out applications and provide financial counseling and advice. MyBanker involves free, one-on-one financial planning and coaching services, available to customers regardless of wealth or income.

Many banks typically reserve this service for high net worth individuals, Klaus said.

“What Berkshire is doing is bringing it down to every income level,” Klaus said.

Currently, Berkshire has about 10 individuals devoted to MyBanker work, and the bank plans to hire another 10 to 12 in the coming year, Klaus said.

With its expansion into Greater New Haven, Berkshire will be investing in communities, through small business lending, community financing, philanthropy, financial inclusion and access for low and moderate income individuals, according to Klaus.

John S. Carusone, president at consultancy Bank Analysis Center Inc. in Hartford, said banks seek out markets of opportunity.

“New Haven and Fairfield counties are among the most attractive banking markets in the Northeast, albeit highly competitive,” Carusone said. “They are commercially dynamic with an abundance of businesses of all sizes, and a certain number of their towns are among the most affluent populations in the U.S.”

Carusone sees a “competitive shakeout” happening among community and regional banks for market share.

“Berkshire Bank, Liberty Bank and others have the capital and management resources to enlarge their geographic reach and increase operating leverage,” Carusone said. “Management skill, capital resources and a competitive outlook are the secret sauce of an expansionist strategy.”

When larger banks merge, it can create opportunities for smaller ones to expand and enter new markets, he noted.

“Smaller community and super community banks differentiate themselves from their larger competitors by promoting personalized, tailored service and flexible, local decision making,” Carusone said. “This is how they position themselves when entering new markets and how they differentiate themselves from the increasingly large banks due to the consolidation from mergers and acquisitions.”