People’s United braces for deferral requests
Of borrowers who got loan deferrals from People’s United Financial, only four in 10 repaid the overdue debt entering July. But the Bridgeport-based bank added to its reserves for problem loans by only a small amount.
People’s United has the largest deposit base of any bank doing business in Fairfield County, trailing only Bank of America and Webster Financial across all of Connecticut.
Throughout the pandemic, the Connecticut Department of Banking and other regulators nationally pressed banks, credit unions, and other lenders to grant payment deferrals to borrowers who asked for them, whether home mortgages and student debt or commercial loans and leases. The company added $72 million to its allowance for possible loan losses during the quarter, pushing its total provision for bad loans to $81 million.
People’s United reported on Thursday that it expects its commercial real estate tenants to collect 70 percent of their rents due by the end of this month, with collections at half that level in May. Of borrowers with mortgages on apartment buildings, rents were coming in at 80 percent of their normal level as of this month.
People’s United has issued more than 14,000 loan deferrals during the pandemic, including about $6 billion in loans outstanding on commercial loans and equipment leases, and about $1 billion for its retail segment that includes household debt like mortgages.
“Most of the deferrals were granted in late March [and]
early April; and so right now as we speak there’s a pretty significant number of those conversations have taken place in the last 30 days, to try to gauge and anticipate how many will be asking for a second,” said People’s United CEO Jack Barnes, focusing his comments largely on commercial debt during a Thursday conference call with investment analysts. “We think the hospitality group definitely will need it — and we’ll definitely accommodate
them.”
People’s United remained profitable in the second quarter, reporting Thursday earnings of $90 million that were off more than 30 percent from the first three months of the year. But the bank exited the quarter with progress on multiple fronts, notably in feedback from commercial real estate borrowers who reported improved rent collections in June from their tenants.
“It’s difficult to predict
what the second half of the year looks like, but as we sit here today they’ve been steadily increasing [payments] since the start of the pandemic,” Jeff Tengel, president of People’s United’s commercial and retail banking divisions, said Thursday. “[They’re] currently in a much better position today than they were three months ago.”