Hartford Business Journal

20 HARTFORDBUSINESS.COM | FEBRUARY 14, 2022 FOCUS: Banking & Finance Brick-And-Mortar Shakeout Big banks accelerate branch closures, while small lenders expand geographic footprints with new locations By Michael Puffer mpuffer@hartfordbusiness.com T he great American bank branch shakeout continued in 2021, with lenders closing a net 59 brick- and-mortar locations in Connecticut, according to new data compiled by S&P Global Market Intelligence. But the closures weren't evenly distributed among banks. Larger national lenders accounted for most of the losses, while smaller, mutual banks tended to maintain, or even grow their brick-and-mortar presence. Bank of America, which saw its deposit base surpass the $1-trillion mark last year, led the state in branch closures. It reduced its footprint by 17 offices, followed by Webster Bank (14), KeyBank (eight) and Liberty Bank (seven), according to the S&P Global report. Meantime, no community lenders in Greater Hartford closed a branch last year, according to the report. "It's a 'Tale of Two Cities' right now is the best way to put it," said George Hermann, president and CEO of Windsor Federal Savings, a community lender with $708.4 million in assets. "The institutions like ourselves, … we are filling in the needs in the communities. We are growing and opening branches as opposed to other places that are looking strictly at their bottom line and consolidating." Windsor Federal opened branches in Windsor, South Windsor and Suffield in the past eight years, Hermann said. It now has an eight-branch footprint in eastern Connecticut. Technology and innovation There has been a 30-year trend of banks pruning underperforming branches, according to John S. Carusone, president of the Hartford-based Bank Analysis Center, an industry consulting firm. This has been driven by industry consolidation and the rise of online banking, which has reduced the need for in-person services, he said. Connecticut's slow growth, the prolonged low interest rate environment and a continued drive for efficiency are additional factors in branch consolidation, Carusone said. Across the U.S., banks closed nearly 4,000 branches in 2021, according to S&P. In Connecticut, the number of branches operated by federally- insured banks has declined nearly 19% over the last decade, according to Federal Deposit Insurance Corp data. As of June 30, there were 1,058 bank branches in the state, FDIC data shows. In the past six years, the main culprit of branch closures has been the loss of smaller banks – with under $1 billion in deposits – to mergers or acquisitions, Carusone said. Typically when they are purchased, the acquiring bank will close branches that overlap with its existing footprint. "This group saw a reduction of 14 banks, down from 33 banks in 2016 to 19 in 2021, and a reduction of 97 branches," Carusone said. Meantime, banks with between $1 billion and $10 billion in deposits added a net of 26 branches since the beginning of 2016. Banks with more than $10 billion in deposits shed 83 branches in the same six-year period. Bank of America spokesperson Vanessa Cook said the bank is constantly adapting its branches and ATMs to fit customers' changing needs. That includes consolidating branches where there is significant overlap and opening new locations with the "latest technology and innovations" where there are high- growth opportunities. Bank of America customers now perform 90% of their banking online, Cook said. Even so, branches remain at the core of the bank's strategy. Bank of America plans to update ATMs at, or perform renovations to, 40% of its Connecticut financial centers by 2025, Cook said. "Our goal is to provide the right network for our clients to do their banking, including financial centers and ATMs, and online, mobile and telephone banking," Cook said. Hermann and David Rotatori, George W. Hermann Ion Bank President and CEO David Rotatori said his Naugatuck-based bank plans to open a Southington branch this year. HBJ FILE PHOTO

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