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Connecticut bank profits top $1B, amid slow loan growth

Connecticut Post logo Connecticut Post 2/21/2019 By Alexander Soule
a building with snow on the ground: The headquarters of People's United Financial in Bridgeport, Conn., in February 2019.© Provided by Hearst Newspapers

The headquarters of People's United Financial in Bridgeport, Conn., in February 2019.

For the first time in history last year, Connecticut banks topped $1 billion in profits from loan interest and other income generated within the state’s borders, according to new federal estimates.

This is a significant gain from 2017 though trailing slightly the profit gains at banks nationally.

Connecticut banks saw their aggregate earnings rise 38 percent last year to $1.2 billion, according to a Thursday report by the Federal Deposit Insurance Corp. The amount is nearly $500 million above their profits in 2005, the peak year of the prior economic expansion. The FDIC reported a 44 percent increase in bank earnings nationally last year to $236.7 billion.

With an additional $341 million in loans outstanding in the final three months of 2018, Connecticut banks pushed to nearly $83.4 billion the total capital extended to Connecticut households and businesses, resulting in a 2.3 percent increase for the full year.

With lending a key determinant of overall economic activity, that was less than a third the pace of year-over-year loan growth in New York, New Jersey, Massachusetts and Rhode Island.

Connecticut loan quality remained strong, however, with a slight decline in the proportion of problem loans banks were forced to wipe off the books after nonpayment. In the fourth quarter for the first time in more than three years, U.S. banks reported lower net charge-offs for bad loans, with stability in their commercial lending base more than enough to compensate for an increase in bad credit card debt.

Connecticut depositors socked away an additional $2.6 billion in cash last year to push the statewide total to $88.5 billion, a 3 percent increase.

Banks cut 150 jobs statewide in the fourth quarter as reported on a full-time equivalent basis to FDIC, but still finished the year with 260 more than when they started for more than 14,830 in all, a record high for any December.

Following its October acquisition of the parent company of Farmington Bank, People’s United Financial disclosed job cuts as it trimmed overlapping branches and corporate duties. Also passing into the annals of corporate history was Prime Bank, which had a single branch in Orange prior to Stamford-based Patriot Bank acquiring it last May.

On a January conference call, a senior executive of People’s United described as “strong” the company’s business lending momentum heading into 2019, with the Bridgeport-based bank the largest in southwestern Connecticut with 24 percent of deposits as of last June according to FDIC data.

In addition to the purchases last year of Farmington Bank and one in eastern Massachusetts, People’s United has acquired two equipment finance businesses in the past year.

“We’ve hired some key people in some businesses that really weren’t active in 2018 that we expect to get a lot of benefit from in ’19, specifically in the franchise finance space, the technology vertical and our not-for-profit team,” said Jeff Tengel, president of People’s United. “We also have had really strong performance in some of our existing businesses — asset-based lending being one of them, our health-care business being another, and ... we expect continued strong performance in those businesses.”

Alex.Soule@scni.com; 203-842-2545; @casoulman

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