State’s pandemic savings still booming with $15B-plus gain

Connecticut bank deposits surged another 9.2 percent in the first full year after businesses resumed operations in the COVID-19 pandemic, according to new federal data, adding nearly $15.5 billion in extra spending power for businesses and homeowners.

The gain came on the heels of a $23.3 billion increase over the 12-month period ending in June 2020 as calculated by the Federal Deposit Insurance Corp. Both gains reflect stimulus payments under the Coronavirus Aid, Recovery and Economic Security Act and successor bailouts to keep households and businesses afloat until business establishments could reopen and COVID-19 vaccinations entered mass distribution.

As a group, Connecticut banks were still in uncertain territory in June 2020 as they struggled to implement the federal Paycheck Protection Program. First-quarter profits were at their lowest point in six years, and three of 10 Connecticut banks incurred losses for the period.

But banks rode a strong first half of this year, and loan volumes — which banks depend to generate profits from interest income — started to pick up.

“We do see some pretty strong growth in credit cards and auto, and I think that’s reflective of the opening back up and consumers getting back out,” said Diane Ellis, FDIC director of insurance and research. “For community banks, it looked sort of like pre-pandemic normal.”

After gauging their financial needs to sustain their operations, many businesses drew on lines of credit from their banks early on in the crisis to sock away cash, in addition to any PPP loans they secured. Some were able to cut back significantly on some costs of business, such as employee travel or utilities in mothballed offices

And middle-class and lower-income families banked stimulus checks that amounted to thousands of dollars of extra income for those that did not see a corresponding decline in their income.

Among the largest banks doing business in Connecticut, JPMorgan Chase reported the biggest gain in Connecticut deposits at nearly 21 percent over the 12-month period ending in June. For the first time ever at the close of that month, client assets overseen by the bank topped $4 trillion.

“The pump is primed — the consumer, their house value is up, their stocks are up, their incomes are up, their savings are up, their confidence are up,” said JPMorgan Chase CEO Jamie Dimon, speaking in July on a conference call. “They’re raring to go.”

Union Savings Bank was the only other retail bank with more than a dozen branches to see a 20 percent increase, with First Bank of Greenwich also up by that margin at its two branches in town.

Over the 12-month period ending in June, both Chase and TD Bank gained deposit share on the four biggest banks in Connecticut: Bank of America, People’s United, Webster Bank and Wells Fargo. With People’s United being merged into M&T Bank, Webster is on the cusp of succeeding the Bridgeport company as Connecticut’s largest homegrown bank.

Winsted-based Northwest Community Bank increased deposits nearly 150 percent, but that was largely due to the company’s January acquisition of Litchfield Bancorp and Collinsville Bank. Adding up the three banks’ separate totals from June 2020, deposits increased 12.8 percent.

The FDIC totals do not include amounts deposited through alternative savings platforms offered by online banks and other nontraditional players, making the true level of Connecticut deposits an unknown.

“We have huge competition in banking and shadow banking, fintech and big tech and Walmart — and obviously there’s always a changing landscape,” Dimon said in July. “I think a lot of them will succeed over time, but that’s called good-old, American capitalism. I’m quite comfortable we'll do fine.”