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A defaulted loan that has been linked to the collapse of a New York State payroll firm will reduce Berkshire Bank’s third quarter earnings by $12 million, according to an SEC filing.
Berkshire Hills Bancorp, the bank’s holding company, announced in an Oct. 21 8-K filing that Berkshire decided to charge-off the full balance of a $16 million loan that had defaulted following “potentially fraudulent activity by the borrower and related interests.” This resulted in a charge to third quarter net income of approximately $12 million, or approximately $0.23 per share on an after-tax basis, according to the the filing. Third quarter earnings are scheduled to be released after the close of business on Oct. 28, 2019.
Berkshire Bank has declined to release the borrower’s name, but the Albany Business Journal and the Albany Times Union have linked the loan to the collapse of MyPayrollHr, a cloud-based payroll and human resources company that operated out of Clifton Park, New York, and shut down in early September. Pioneer Bank was the lead lender on a $36 million commercial lending arrangement and previously reported a $16 million exposure. Chemung Financial Corp. has also been linked to the arrangement with a $4.2 million exposure.
