New Haven Register (Sunday) (New Haven, CT)
‘A lot of momentum’
Connecticut bank loans spike past $100B, driven in part by Webster merger
Connecticut-based banks busted through the $100 billion loan threshold for the first time in February, following the merger of Webster Financial with a New York lender — likely a short-lived milestone after People’s United Bank was absorbed weeks later into Buffalo, N.Y.-based M&T Bank.
In bolting on Sterling Bancorp, Webster Financial accounted for the vast majority of a $20 billion spike in loans on the books of Connecticut banks according to a spokesperson with the Federal Deposit Insurance Corp., a 24 percent increase in three months to push the total to $103.7 billion. That shattered the previous record at $92 billion in loans on the doorstep of the COVID-19 pandemic in March 2020.
Connecticut bank deposits also shot up to a record high of $140.5 billion as a result of the Webster-Sterling merger.
If the FDIC applies the same loan classification rules for People’s United, Connecticut bank loans will have already dropped back below the $100 billion threshold with M&T’s April takeover of People’s United based in Bridgeport.
The FDIC will update Connecticut bank loans as part of its next quarterly banking profile scheduled for late July.
In Connecticut and nationally banks have been working to normalize lend-companies ing as Paycheck Protection Program loans have come off the books that were forgiven by the federal government for business borrowers. The chief financial officer of M&T predicted loan growth between 3 percent and 5 percent in the near term, even as some borrowers accelerate repayments.
Heading into the merger, Webster established a new headquarters office in Stamford after long being based in Waterbury. The FDIC provides an annual update each fall on the specific branch offices where banks collect or assign deposits, but the agency does not track the towns and states where issue loans.
Speaking in late April, Webster CEO John Ciulla said loans and deposits increased “smartly” in his words during the first quarter, adding customers at that point remained confident in the economic outlook despite the Ukraine conflict’s impact on energy markets and stubborn inflation fueled by federal stimulus money since the COVID-19 virus outbreak.
“A lot of momentum,” Ciulla said on a conference call with investment analysts. “We have significant capacity to expand.”
Ciulla said the Sterling merger allows the combined company to bid for larger commercial financing deals that can produce bigger profits for the bank. He added Sterling has also opened up a new avenue for health-savings accounts that are a major part of Webster’s portfolio, particularly in the context of the current hiring drive in the Northeast and nationally that has companies setting up new employees for HSA programs as part of their health plans.
On Friday, the U.S. Department of Labor released estimates that employers added 390,000 jobs in May.
Separately last month, the Connecticut Department of Labor reported Connecticut employers posting 10,000 fresh job ads online in each of three successive weeks in May, a first, but with employers struggling still to hire people at the compensation and terms they are currently offering.
On Wednesday, JPMorgan CEO Jamie Dimon sounded a note of caution, saying he and fellow executives remain “quite concerned” about the economic outlook.
“Huge growth in this country driven by fiscal and monetary stimulation — that isn’t a normal recovery,” Dimon said during an investment conference sponsored by Bernstein. “Right now it’s kind of sunny, things are doing fine, everyone thinks the Fed can handle this — that hurricane is right out there, down the road, coming our way. We just don’t know if it’s a minor one or Superstorm Sandy.”