Despite rough fourth quarters, the two largest banks based in Connecticut still have their eyes set on expansion.
Webster Financial Corp., parent of Waterbury-based Webster Bank, isn’t wavering from its plans to open a major flagship office in the former Boston Stock Exchange building this year, CEO James Smith told analysts recently.
Meanwhile, People’s United Financial Inc., parent of Bridgeport-based People’s United Bank is looking for acquisition targets between Washington, D.C., and Maine, CEO Philip Sherringham told analysts during a Jan. 23 conference call.
Although the banking companies are roughly the same size, People’s has weathered the financial crisis much better, and the stock market places a much higher premium on it than Webster.
Peoples had assets of $13.6 billion at yearend, while Webster’s assets were $17.2 billion. But People’s market capital of $6.0 billion was far more than Webster’s $205 million. While Peoples’ share price has fallen 20 percent to $17.34 from its 52-week high, Webster’s shares were off 89 percent to $3.83 from its 52-week high.
In the fourth quarter, People’s reported that profit dipped 23 percent to $35.4 million from $45 million in quarter a year earlier.
Sherringham said his company is looking to acquire a “commercially oriented franchise.”
“We still feel the best use of our capital is to have the patience to find and execute a well-priced acquisition that will enhance the long-term profitability of the company,” he added.
In its fourth quarter, Webster suffered a $300.5 million loss and it announced that it was cutting 200 jobs.
The move into the Boston office will likely cost between $1.5 million and $2.0 million, according to Jerry Plush, chief risk and financial officer at the bank. Plush assured analysts that the bank is looking for ways to offset some of the expenses associated with the move. In November, Webster Bank revealed its plans to move into the Boston market with a major office that would offer a broad range of retail and commercial services, including asset-based lending, government finance services and commercial real estate lending.
The bank has 24 branches in Massachusetts, but little to no representation in Boston, aside from an ATM network. The new flagship office at 100 Franklin St. in Boston will likely serve as the company’s state headquarters, analysts said.
Also in November, Webster said it was cleared to receive $400 million under the U.S. Treasury’s broad banking rescue effort to cushion its capital reserves against deteriorating loans.
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Hedge Fund Withdrawals
The hedge fund industry concluded its worst year in history as investors withdrew a record $152 billion in December alone, according to Chicago-based Hedge Fund Research, which tracks the industry.
Global hedge fund assets dropped to $1.4 trillion at the end of the year, the same level as 2006 and $525 billion less than a peak of $1.93 trillion in June, Hedge Fund Research said.
The 18.3 percent drop for all of 2008 marked only the second calendar year decline since 1990. Also during 2008, the industry experienced six consecutive monthly declines (June through November), interrupted only by December’s 0.41 percent gain despite the record amount of withdrawals.
In September and October alone, the industry’s assets fell by 13 percent.
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Robbers Take A Break
While the number of bank robberies rose sharply in many states last year, Connecticut saw a 31 percent decline in such crimes, according to data obtained from the Federal Bureau of Investigation.
Connecticut banks were robbed 74 times last year compared to 107 times a year earlier, the FBI said.
Thieves got away with nearly $750,000 in cash, compared to $1.2 million a year earlier, according to the FBI.
A deepening recession and higher unemployment rates have been blamed for a spike in bank robberies in other states, notably California and Texas.
In New York there were 430 bank robberies in 2008, a 54 percent increase over 2007.
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Greg Bordonaro is a Hartford Business Journal staff writer.
