🔒Growing Footprints: Out-of-state banks eye continued expansion in CT

A period of consolidation in Connecticut’s banking industry in recent years has presented opportunities for out-of-state players to enter the market, finding and filling niches that have opened up.

Three that entered Connecticut from neighboring states over the last decade all recently pledged their continued interest in the state, and their intent to expand further.

Massachusetts-based PeoplesBank first established a brick-and-mortar presence over the border in 2018, with its $60 million purchase of First National Bank of Suffield.

That gave the Holyoke-based bank, with $3.9 billion in assets, branches in Suffield, West Suffield, East Granby and Windsor Locks.

“It was a nice first step into the market,” said President and Chief Operating Officer Brian Canina.

In 2021, the bank opened a new location in West Hartford.

Now, it’s eyeing two new branches in Avon and Glastonbury, which are projected to be up and running by the end of this year.

And that’s not all.

“We have an eye on downtown Hartford right now, looking to serve all of that population,” said Canina.

A future Hartford location could end up serving as PeoplesBank’s Connecticut headquarters, the bank said.

PeoplesBank Chief Credit Officer Frank Crinella emphasized that in a consolidating market, there’s an advantage for anyone who can offer genuinely local service to customers.

“They know where to go to get an answer. They don’t call a 1-800 number,” he said. “That’s the opportunity that the bank’s seen. And we’re seizing the moment, despite some of the headwinds that we’re facing in the industry,” including a high interest rate environment that has curbed residential and commercial loan demand.

Canina said his bank is focused on growing its commercial and residential loan portfolios in Connecticut.

“We’re not going to wait for necessarily the right economic time,” said Canina, whose bank had $400.6 million in Connecticut deposits as of June 30, 2023. “We’ll find a way to manage the economics of who we’re serving.”

Already, 36% of PeoplesBank’s $2 billion commercial loan portfolio is tied up in deals in Connecticut, where it had business customers well before it established its first branch in the state.

Top-level talent

Massachusetts-based Westfield Bank, with $2.6 billion in assets, has had a physical presence in the Nutmeg State even longer, establishing branches in Granby in 2013, and then Enfield in 2014.

Westfield, a subsidiary of holding company Western New England Bancorp, has achieved its growth by opening new branches, rather than acquiring existing ones.

Since its entry, the bank has added locations in Bloomfield and West Hartford, and is looking for other growth opportunities, according to CEO James Hagan.

Hagan said he sees many communities in Connecticut as analogous to the bank’s roots in Massachusetts.

“There are a lot of similarities, particularly on the lending side where you have a lot of machine shops, you have locally owned businesses,” he said. “And it fit really well with our business plan and our strategy.”

Executive Vice President and Chief Banking Officer Kevin O’Connor said Westfield Bank is focused on growing its retail and residential loan portfolios this year.

Westfield, which reported $177.2 million in Connecticut deposits as of June 30, 2023, had $373 million in loans in the state at the end of 2023, including $263 million in commercial loans and $110 million in residential loans, O’Connor said.

Hagan said as Westfield has expanded, the bank has made a point of hiring locally, a move that’s been facilitated by the unstable banking landscape in Connecticut.

“With all the mergers and acquisitions, we’ve been fortunate to hire some really top-level talent that might not have ordinarily been looking or even available,” he said.

Wealth and trust business

Consolidation has significantly shrunk the number of banks headquartered in Connecticut over the decades. There were 29 Connecticut-based banks at the end of the third quarter of 2023, down from 46 in 2013, and 66 in 2003, according to Federal Deposit Insurance Corp. data.

Recent deals included New York-based M&T Bank’s purchase of People’s United Bank in 2022, and NBT Bank’s $204 million acquisition of Salisbury Bancorp last year.

NBT is a subsidiary of publicly traded NBT Bancorp Inc., based in Norwich, New York. The bank first entered the Connecticut market in 2020, and saw last year’s acquisition as an opportunity to jump-start its growth in the state, said Regional President Andreas Kapetanopoulos, who’s based in West Hartford.

“With an acquisition, you just never know what’s going to come along,” Kapetanopoulos said. “But in that situation, it just made so much sense geographically with the footprints, it just fit in very nicely.”

The bank, with $13.3 billion in assets, has also made moves into Vermont and New Hampshire in recent years. In buying Salisbury, NBT acquired 13 branches in northwest Connecticut, the Hudson Valley and southwestern Massachusetts, and it now has more than half-a-billion dollars in loans in Connecticut.

Salisbury Bank’s well-developed wealth management and trust portfolio was the most attractive piece for NBT, which, even though it cut Salibury’s headcount, went from 15 Connecticut employees to 90 overnight with the acquisition.

“It was critical for us to retain the customer-facing employees,” Kapetanopoulos said. “And that’s also key for the customers, for them to come in and to see the familiar faces. Maybe the name changed out front, but you’re going to walk in, you’re going to see the same people, they’re going to recognize you.”

And NBT is not done expanding either.

“We are actively looking at some locations to try to bridge the gap between the northwest corner and then central Connecticut,” Kapetanopoulos said.

One thing that would facilitate that, he said, is a revival in the housing market.

“On the residential side, obviously there is a need for housing,” Kapetanopoulos said, but “... the single-family housing stock is just not there.”

But, like its Massachusetts-based neighbors, NBT said it’s in it for the long haul in the Nutmeg State.