Safe and Sound

Berkshire Bank

Pittsfield, MA
4
Star Rating
Berkshire Bank is an FDIC-insured bank started in 1846 and currently based in Pittsfield, MA. The bank holds equity of $1.11 billion on assets of $9.58 billion, according to June 30, 2017, regulatory filings.

With 1,691 full-time employees in 99 offices in multiple states, the bank has amassed loans and leases worth $6.96 billion, including real estate loans of $5.30 billion. U.S. bank customers currently have $6.89 billion in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Berkshire Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three key criteria Bankrate used to grade U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial strength, capital is crucial. It works as a cushion against losses and as protection for depositors when a bank is struggling financially. When looking at safety and soundness, more capital is preferred.
Berkshire Bank received a score of 6 out of a possible 30 points on our test to measure the adequacy of a bank's capital, lower than the national average of 13.38.

One essential measure of this buffer is a bank's Tier 1 capital ratio. Berkshire Bank's Tier 1 capital ratio was 10.23 percent, higher than the 6 percent level regulators consider adequate, but lower than the national average of 25.16 percent. A higher capital ratio means the bank will be better able to stand up to financial downturns.

Overall, Berkshire Bank held equity amounting to 11.62 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

Bankrate uses this test to determine the impact of problem assets, such as unpaid loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

Having lots of these kinds of assets suggests a bank may have to use capital to cover losses, shrinking its cushion of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning interest for the bank, resulting in diminished earnings and potentially more risk of a future failure.

Berkshire Bank scored 40 out of a possible 40 points on Bankrate's asset quality test, beating out the national average of 37.62.

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 0.46 percent of Berkshire Bank's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.04 percent.

Banks keep a reserve to handle problem assets known as an "allowance for loan and lease losses." The size of that reserve can be a widely used indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Berkshire Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. A bank can retain its earnings, increasing its capital cushion, or use them to address problematic loans, likely making the bank better prepared to withstand economic shocks. Conversely, losses reduce a bank's ability to do those things.

Berkshire Bank scored 14 out of a possible 30 on Bankrate's test of earnings, falling short of the national average of 16.52.

One important measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. Berkshire Bank's most recent annualized quarterly return on equity was 6.39 percent, below the national average of 9.28 percent.

The bank recorded net income of $34.6 million on total equity of $1.11 billion for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.74 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 percent.








WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.