It looks like 2011 will bring a significant increase in the number of Connecticut banks offering mobile banking technology.
The Connecticut Department of Banking recently released results from a 2010 survey of electronic banking activities in the state, which showed that less than 20 percent of state-chartered banks offered mobile banking at the end of last year.
But the survey found that number is expected to increase to nearly 50 percent during 2011.
All state-chartered banks responded to the survey, so the numbers are a strong indicator of where the industry is heading.
In addition to ease of access, competition is also a major factor in banks adopting the technology. Mobile banking is becoming increasingly popular as banks compete for younger and more tech savvy customers.
And larger institutions with deeper pockets have often led the way in offering the service to customers. But it appears that smaller banks in Connecticut are now more willing to invest in the technology to avoid losing market share.
Connecticut credit unions are much farther behind when it comes to mobile technology. Only 10 percent of state-chartered nonprofit cooperatives said they make mobile banking applications available to customers. That number, however, is expected to double by the end of 2011.
The bank survey also found that:
• Many of the technologies that were expected to have an impact on banking — including content aggregation, links to electronic marketplaces, and automated loan machines — never increased in scope of use.
• Use of social media is limited — with less than 10 percent of credit unions reporting a social media presence — but growing. Nearly 50 percent of the banks surveyed plan to have a Facebook presence by year-end 2011.
• Telephone banking remains a significant technology with over 70 percent of institutions continuing to offer the service.
The survey also found credit unions’ websites are highly utilized for loan activity with 60 percent of credit unions providing loan application downloads and nearly 60 percent providing loan history information.
Bank quits timeshares
Farmington Bank, the newly minted publicly traded lender with $1.5 billion in assets, is exiting the timeshare business.
Management at the bank recently decided that it will no longer lend to developers and operators of timeshare vacation resorts, a book of business the bank got into in 2007 and built a sizable portfolio.
At the end of 2010, the bank had $105.2 million in outstanding timeshare loans, according to a regulatory filing the bank made with the U.S. Securities and Exchange Commission.
John J. Patrick, Jr., the chairman, president and CEO of Farmington Bank, said the timeshare industry has been negatively impacted by the weakened economy and slow economic recovery, making that line of business a higher credit risk.
In mid-2009, he said, many larger lenders began to pull back their activities in this area, and in early 2010, Farmington Bank placed a moratorium on future loans in this portion of its portfolio.
“We have recently decided to gradually exit this line of lending in its entirety,” Patrick said.
He added that the bank will do an orderly phase-out of the business to devote full resources to its core commercial lending services.
Patrick said the decision to get into the timeshare business was made by the former management team in 2007. Despite the tough economy, he said, the timeshare portfolio has held up fairly well. The bank did set aside about $4.9 million last year to cover one bad loan but the rest of the portfolio is still performing soundly.
As the bank exits the timeshare market, it will continue to hold $100.6 million in outstanding loans and honor any advances requested relating to the $29.6 million in outstanding loan commitments as of Sept 30, 2010 until they are repaid in the normal course of business. That could take three to five years, Patrick said.
Patrick said the bank will continue its primary focus of lending locally and growing its market share in Central Connecticut.
Bottomley to People’s
Former Danversbank CEO Kevin T. Bottomley has joined the board of directors of Bridgeport-based People’s United Bank.
Bottomley will become the 12th member of People’s United’s expanded board and will serve until 2013.
As part of the merger agreement between People’s United and Massachusetts-based Danversbank, People’s United agreed to expand its board of directors and allow Bottomley to take the newly created seat.
People’s United completed its $462 million acquisition of Danversbank earlier this month.
Greg Bordonaro writes the Financial Sense column every other week. Reach him at gbordonaro@HartfordBusiness.com.
