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A Berkshire Bank storefront branch in Boston’s Brighton neighborhood. Photo by James Sanna | Banker & Tradesman Staff
Berkshire Bank has partnered with financial technology firm Upstart to launch a new lending platform that could lead to $100 million in consumer loan originations annually.
The bank announced this week that it had launched the partnership with Upstart in August, and Berkshire CEO Nitin Mhatre said in a conference call Thursday to discuss third quarter earnings that the new partnership was part of the bank’s strategy to work with fintechs “that provide easier access to credit for customers in our footprint, where we can build on to a larger relationship.”
The Upstart platform makes loan decisions using artificial intelligence, Mhatre said, adding that the platform has about 1,500 factors that maximize loan opportunities for customers while providing the best available price.
The new platform will provide loans to customers with a minimum credit score of 625, and Mhatre said he has heard from other banks using the platform that the average credit score is above 700. Berkshire does not plan to offer the loans nationally, Mhatre said in response to an analyst’s question, but will instead focus on the bank’s footprint, which includes Massachusetts, Connecticut, Rhode Island, Vermont and New York.
In response to an analyst’s question about whether Berkshire will continue to target $100 million in loan originations each year, Mhatre said the bank expects $100 million in originations annually just from the Upstart partnership, adding that the bank also plans to work with other fintech partners in the future.
Mhatre also said that the Upstart platform will let the bank track the performance of the portfolio, analyze customer repayments, recalibrate the decisioning model, and see how the portfolio is operating.
“There is tremendous amount of AI-based intelligence that goes behind this that helps us track the portfolio, and we get the benefit of that,” Mhatre said.
The bank has been hiring new frontline bankers over the past two quarters after announcing its “Best” strategy in May to turn around the troubled bank. Mhatre said the originations across the loan portfolio from these new hires could pick up in the second quarter of 2022, eventually leading up to $1 billion in originations.
The bank’s parent Berkshire Hills Bancorp Inc., saw third quarter 2021 earnings per share increase year-over-year by 212 percent to $1.31 compared to $0.42 in 2020 and $0.43 in the second quarter of 2021. Third quarter earnings included $0.78 per share in net non-operating income, consisting primarily of net gains from the sale of the Berkshire’s insurance subsidiary and Mid-Atlantic branches, the bank said in its earnings statement. Excluding these amounts, Berkshire’s third quarter adjusted net income totaled $0.53 per share, which was unchanged from the second quarter. The bank had a $52 million net gain on the sale of the insurance and Mid-Atlantic branches.
