B of A makes big gain in market share, data shows

Despite bad press over new fees, foreclosures and layoffs, Bank of America isn’t having a problem protecting its turf in Connecticut.

In fact, the North Carolina banking giant has actually been growing its market share in the state and putting an even greater distance between itself and its nearest competitors, according to recently released data from the Federal Deposit Insurance Corp.

Bank of America saw its deposit base in Connecticut jump more than 16 percent from June 2010 to June 2011 adding close to $3.5 billion to its deposit base, a significant year-over-year increase in the competitive banking landscape.

With $24.3 billion in total Connecticut deposits, the bank now owns nearly 24 percent of the market.

Meanwhile, the bank’s closest two competitors — Waterbury-based Webster Bank and Bridgeport-based People’s United Bank — have fallen further behind.

While Webster and People’s United each added deposits over the past year, their respective market shares in Connecticut fell slightly to 11.42 percent and 9.96 percent, respectively, from 12.1 percent and 10.1 percent, a year earlier.

Webster and People’s United have $11.6 billion and $10.1 billion in Connecticut deposits, respectively.

Bank of America’s continued dominance comes as the company faces severe headwinds from the rough economy and an ailing mortgage business. The bank announced last month that it plans to cut about 30,000 jobs nationally over the next few years in a bid to reduce expenses and shrink its massive footprint and save $5 billion per year.

In September, Bank of America said it would lay off 106 Connecticut workers in Hartford and East Hartford, but those cuts were unrelated to the recent restructuring plan.

Even with the challenges, bank spokesman T.J. Crawford said the company “is stronger today than it was a year ago or two years ago during the financial crisis.”

“Over the last year, we have strengthened our balance sheet by increasing liquidity, selling non-core assets and building capital ratios,” Crawford said.

One of the main draws to Bank of America, Crawford said, is the many different channels it offers customers to conduct business, including banking centers, online banking, contact centers, ATMs and mobile banking.

A key advantage larger banks have over the competition is their ability to use their size and scope to invest in new technologies, like mobile banking, that are becoming increasingly popular among customers.

“We can offer the bank on the corner or in the palm of your hand,” Crawford said.

Overall, the 70 banks that operate in Connecticut added $5.78 billion in deposits over the past year, increasing their total share to $101.5 billion. Some banks lost deposits, but most gained business.

The top 10 largest banks in the state remained mostly unchanged and include mainly national or regional players.

Wells Fargo, TD Bank, First Niagara Bank and JP Morgan Chase are the fourth through seventh largest banks in the state with between $8 billion and $4 billion in deposits, respectively.

Citibank, another large financial conglomerate, also saw a significant increase in its Connecticut business, adding $676 million in deposits, making it the eighth largest bank in the state. Citibank moved up two spots passing Middletown-based Liberty Bank and Citizens Bank.

On the community banking front, Farmington Bank’s recent growth efforts seem to be paying dividends as it saw one of the biggest increases in market share. The bank added $282 million in deposits for a total of $1.4 billion, a 21 percent increase from 2010.

Big banks dominating in Connecticut hasn’t always been the trend.

In 1994, state-chartered banks had a stranglehold in the state with 60.5 percent of the deposit market, while the 10 largest federal-chartered institutions had 38.3 percent. Since then, mergers and acquisitions helped federally chartered banks in Connecticut — including Bank of America, Wells Fargo, TD Bank, JP Morgan Chase and Sovereign Bank — grow dominant.

Some industry insiders saw the financial crisis as a rare opportunity for community banks to close that market share gap, especially as nervous investors were pulling money out of the stock market and looking for safe places to store it.

But that didn’t happen in Connecticut and the big boys have continued to solidify their top positions.

On the branch front, a combination of closings and openings put the total number of bank offices in the state at 1,301, which is up slightly from 1,296 a year earlier.

Greg Bordonaro writes the Financial Sense column every other week. Reach him at gbordonaro@HartfordBusiness.com.