Hartford Business Journal

www.HartfordBusiness.com • November 30, 2020 • Hartford Business Journal 11 uncertainty," Bruce said. Balances swell As measured by the FDIC, in-state bank deposits stood at $162.88 billion as of June 30, 2020, compared with $134.82 billion a year prior. The double-digit percentage growth swamps the previous two- decade record of 8.9%, observed in mid-2009, as Connecticut was just emerging from the nearly two-year Great Recession. This year's April-to-June quarter saw a flurry of federal stimulus hit bank accounts nationwide, including forgivable PPP loans to employers — many of which are still sitting in area accounts, surprising some bankers — and roughly $270 billion in direct payments to consumers. Across the U.S., banks have seen their deposits approach $17 trillion, up from $13.3 trillion at the start of 2020, though the growth has subsided somewhat since June, falling to $15.78 trillion as of October, according to data from the Federal Reserve Bank of St. Louis. Despite the national trend, some Connecticut banks have continued to see deposit growth following the stimulus influx. That includes Union Savings, Windsor Federal and Liberty, which all saw some deposit growth in the third quarter. "To some extent, that was a sur- prise," said Union's Bruce. Part of it has to do with the PPP, which Congress extended over the summer, giving borrowers more time to spend down the money. Roughly three-quarters of the PPP funds held in Liberty accounts were still there as of the third week of November, Young said. Barring further stimulus, deposits will likely shrink from their recent highs, potentially starting with the current final quarter of 2020. However, Young said balances may remain elevated overall, particularly if consumers are alarmed by the recent increases in COVID-19 infections, which are projected to continue into January. "The spike in cases is here, there are increased hospitalizations, and we're looking at potential lockdowns again," he said. FOCUS: BANKING & FINANCE Biggest deposit gainers in CT (Dollar amounts in thousands) Bank 6/30/20 6/30/19 Change % change First Republic Bank $649,535 $469,583 $179,952 38.32% Windsor Federal Savings and Loan Association $590,163 $433,506 $156,657 36.14% The National Iron Bank $163,682 $122,135 $41,547 34.02% Liberty Bank $5,303,588 $3,977,793 $1,325,795 33.33% Westfield Bank $105,466 $80,203 $25,263 31.50% Connecticut Community Bank $525,375 $401,134 $124,241 30.97% BNY Mellon $434,000 $334,000 $100,000 29.94% People's United Bank $27,481,773 $21,218,512 $6,263,261 29.52% Hometown Bank $289,652 $225,866 $63,786 28.24% Signature Bank $974,742 $761,431 $213,311 28.01% Source: Federal Deposit Insurance Corp. Pandemic will lead to branch closures, but physical locations remain key for many bankers By Matt Pilon mpilon@hartfordbusiness.com C onnecticut bank branches have been declining in number for the past decade, and closures reached new highs during the past two years. Now, the COVID-19 pandemic — currently in its second wave — is creating new challenges for in-person banking that could lead to further shrinkage of banks' brick-and-mortar footprints. But don't expect a mass wave of branch closures in the state either. Despite more consumers banking online in recent months, bankers say brick-and-mortar outposts remain key assets that allow for more complicated and high-value business with custom- ers, such as issuing mortgage or com- mercial loans. "We still believe in the importance of brick and mortar, as we believe our branches serve as billboards and represent convenience for so many customers," said Union Savings Bank CEO Cynthia Merkle, who oversees 25 branches, including one in Canton. Union Savings, which has $2.7 billion in assets, has no plans to open new branches in 2021, but will renovate its Roxbury branch, she said. George Hermann, CEO of $647.2 million Windsor Federal Savings, said branches don't need to be as large as they used to be, but they are still important. "You need to have a presence," said Hermann, adding that his eight-branch geographic strategy remains largely unchanged by COVID-19. "It's still an important part of the business model." Despite the pandemic, Ion Bank has no plans to put the brakes on a Hart- ford County expansion it began several years ago, said CEO David Rotatori. The Naugatuck-based bank will soon open a new branch, its 19th overall, in the Unionville section of Farmington, and Rotatori said his team has been scouting potential branch locations in South Windsor and two other area towns. "COVID has sped up many facets of our technology platforms -- online banking and bill pay are way up, but people still want to know that they have a branch they can go to," Rotatori said. For mid-sized local banks, branches are especially important for getting customers in the door. "Let's face it, we don't have the advertising budget the larger banks do to bring in new customers online," Rotatori said. "That physical presence is still our best tool." A slow burn Over the past 20 years, Connecticut banks have nearly tripled the deposits they hold, but because of mergers and acquisitions, that money is spread among fewer and fewer players. That consolidation has also led to the closure of many bank branches. Connecticut has lost about five bank branches per year since the turn of the century, according to Federal Deposit Insurance Corp. data. However, the losses have been con- centrated over the past decade, when the state's net bank branch count fell by an average of approximately 20 locations per year, compared with an average net gain of 11 branches per year during the prior decade. The declines in Connecticut brick- and-mortar bank offices reached new highs in 2019 and 2020, with lenders closing a net total of 30 and 35 loca- tions, respectively. Many of those recent closures were the result of mergers and acquisitions. For example, People's United Bank shuttered approximately 30 branches over the past two years following its purchases of Farmington Bank and United Bank. Branches have been dwindling nationally in recent years as well, but there's no evidence right now that the pandemic has accelerated the closures. According to a data analysis pub- lished by Forbes in late September, the Office of the Comptroller of the Curren- cy received 893 branch closure notifica- tions across the country between March and August of this year, down from 967 over the same period in 2019. Cynthia Merkle is the CEO of Union Savings Bank. Deposits

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