The Middletown Press (Middletown, CT)
Conn. banks see profits during pandemic, but job growth slow
Despite closing 2020 with their third-best profits ever, Connecticut banks entered this year having yet to bring back the jobs they shed during the COVID-19 pandemic. Statewide payrolls are at their lowest since the aftermath of the Great Recession.
The jobs scenario reflects two trends in Connecticut and the New York City region — uncertainty over the economic outlook and a discovery that banks in some instances are able to fulfill customer expectations adequately with fewer employees.
Banks have braced for the uncertainty of whether residential and commercial borrowers will be able to keep up with their loan commitments, particularly in niche industries like hospitality or in locales where unemployment levels remained elevated for any extended stretch.
But whereas Connecticut banks cut jobs last year, banks in some parts of the United States were staffing up — only slightly in the aggregate, according to data supplied the Federal Deposit Insurance Corp. In Northeast banks, only New Jersey and Maine saw staff levels increase last year, with New York absorbing only a slight decrease.
As of December, Connecticut banks listed 86 cents of every $100 in loans outstanding as being in arrears on payments due, equating to about $772 million on a total loan portfolio totaling a record $89.8 billion. Loan portfolios are in far better shape than at the worst point of the Great Recession, when problem loans accounted for about $3 of every $100 on the books. But banks are nevertheless socking away reserves against the possibility some borrowers will go bankrupt.
“We’ve been very patient with our hotel [borrowers] — and with good reason,” said Jack Barnes, CEO of People’s United Financial, during an interview after the company announced a $7.6 billion agreement to merge into M&T Bank. “I believe we’ll get there and help them get to the other side of this. Our regulators have also been very supportive of banks’ flexibility and patience on that . ... Everyone’s trying to do the right thing.”
Prepared to expand
After hospitals emergency wards, bank staffs may have absorbed the next largest crush of pandemic mayhem last spring after the U.S. Department of the Treasury pushed the Payroll Protection Program out the door.
Banks had only hours’ notice to learn the intricacies, finalize systems, and train staff to handle the flood of PPP applications, with the funds supporting hundreds of thousands of jobs. While more than 67,000 businesses in Connecticut were able to land financing, many complained in the early going about responses by banks to which they were applying, even as banks reassigned staff to handle demand.
On the eve of a new round of PPP initiated last month, Connecticut banks were continuing to make do with staffing levels well below a year ago. In the aggregate, banks reported carrying 13,700 jobs calculated on a full-time equivalent basis as of the end of December, according data revealed this week by the Federal Deposit Insurance Corp. That was about 640 fewer than 12 months earlier, a 4.4 percent decline.
Banks held the line on payroll despite profits eclipsing the $1 billion mark for a third consecutive year. While that was down 22 percent from record earnings in 2019, profits were nevertheless five times what they booked in 2009, when the industry had about 200 more workers on their collective payrolls.
“Even in a pandemic year, you look at commercial loan growth and it’s approaching 8 percent to 10 percent,” said John Ciulla, CEO of Waterbury-based Webster Financial and its Webster Bank subsidiary. “We’re not about generating shareholder value through cost cutting . ... Our goal, obviously, is if we do get a lift in rates and loan growth comes back significantly, we want to be prepared to be able to expand commercial banking, hire new commercial bankers, continue to invest in technology.