Bank Employees Complained of ‘Toxic’ Culture Just Before CEO’s Sudden Exit

(Bloomberg) -- An anonymous letter about a “toxic” workplace culture may have spurred the departure of a small-cap bank chief executive.

Michael Daly, who led Berkshire Hills Bancorp Inc. in Pittsfield, Massachusetts, for 16 years, stepped down this week, taking analysts by surprise. Piper Jaffray analysts led by Matthew Breese said the resignation may have been precipitated by an anonymous letter last month describing the workplace as “toxic” and in dire need of change.

The letter was purportedly written by employees and was sent to “analysts, several bank insiders and several prominent members of the community,” Piper Jaffray said.

A spokeswoman for Berkshire Hills in a comment to Bloomberg News declined to elaborate on Daly’s departure, but said that workplace culture is one of the company’s top priorities, with employees as its “most valuable asset.”

Citing employee reviews of the company and leadership on Glassdoor.com, Piper Jaffray’s Breese wrote that he thought it unlikely that Daly’s departure was a coincidence and said it was likely related to the culture. “Just 25 percent of employees” would recommend Berkshire to a friend, below the 62 percent median within Piper’s coverage universe, Breese said. CEO approval was around 35 percent, compared to Piper’s 84 percent median.

The company’s shares fell as much as 2.4 percent Tuesday, among the worst performers in the Russell 2000 Banks: Savings, Thrift & Mortgage Lending Index. It was down 2.1 percent at $33.36 at 3:04 p.m. Tuesday in New York.

Breese rates the bank at the equivalent of a hold. The stock has one buy, five holds and no sells. The average price target suggests 13 percent upside to the shares over the next 12 months, according to data compiled by Bloomberg.

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