Hartford Courant: PeoplesBank Continues Connecticut Expansion

Article by: Kenneth R. Gosselin, Hartford Courant 

PeoplesBank South Windsor Banking Center

Six years ago, PeoplesBank made its first move into Connecticut branch banking, buying a small Suffield bank, and it is now opening three offices in key markets in greater Hartford — including one in downtown Hartford that the bank expects to launch by the end of the year.

But the Holyoke, Mass-based community bank — with no connection to Bridgeport-based People’s United Bank acquired by M&T Bank in 2022 — is approaching its branch expansion knowing that an increasing number of consumers are turning to online and mobile banking, meaning fewer and fewer trips to the branch.

“We’re going to change the inside of the branch to focus on small business rather than just the retail customer,” Tom Senecal, chief executive of PeoplesBank, said. “There will be what we call ‘retail pods’ and more of a desk-oriented place for small business.”

The traditional bank teller window has been for years increasingly sidelined in the design of new branches. But even as consumers go digital — a trend hastened by the pandemic — small businesses still see the branch as critical for managing their finances.

The change in how branches are deployed comes as part of a broader trend of declining branch locations overall. Nationally, banks are pulling back on branches to invest in the increasingly sophisticated technology demanded by its customers.

In the last decade, the number of bank branches in Connecticut declined nearly 24%, down to 978, as of June 30, 2023, the latest statistics available from the Federal Deposit Insurance Corp. show. That compares with 1,278 in 2013, a difference of more than 300, according to the FDIC, which insures deposits.

And more closures are on the way.

Last week, Boston-based Berkshire Bank told banking regulators that it planned to close three branches, located in Hartford, Tolland and Killingly, by the end of June. The bank, with branches in Connecticut and four other states, also has been downsizing its branch network elsewhere, trimming 10 branches in upstate New York.

“We regularly evaluate our network of financial centers to ensure we are delivering our services based on customer preferences, the bank said, in an email. “Berkshire Bank remains committed to serving our clients and communities in Connecticut through our network of nearly 20 financial center locations in the state.”

Banks are changing how they deploy their branches now that more consumers are doing their banking online and on mobile.

Certainly, consumer preferences for accessing their accounts has changed with the advent of digital banking.

A recent survey by the American Bankers Association revealed that 45% of consumers nationwide used smartphone apps or other mobile devices as the top option for managing their accounts in the previous year. Another 27% used online banking from a computer, while just 14% sought out a branch.

Beyond having to go farther to find a branch, the effect may be the most acute not on consumers but for the owners of small businesses, said Mohammad N. Elahee, professor of international business at Quinnipiac University in Hamden.

“That human interaction part is very important especially for a small business,” Elahee said. “Sometimes, it is more convenient to go a talk with a manager in person, to talk about business issues, rather than calling the 800 number or talking with a chatbot.”

Market disruption

In addition to the dwindling of branches, the number of banks in Connecticut has declined to 52, down nearly 18%, compared to 70 a decade ago, according to the FDIC. There also has been an increasing shift in deposit market share, with the 10 largest banks holding 80% of the deposits, compared with 77% a decade ago, FDIC reports show. The largest banks in Connecticut are Charlotte, N.C.-based Bank of America, Webster Bank, based in Stamford, and M&T, headquartered in Buffalo, N.Y.

PeoplesBank, founded in 1885, embarked on its branch expansion into Connecticut in 2018 with an already established business loan portfolio. About 60% of its commercial loans were already with Connecticut-based companies. Today, PeoplesBank has 22 branches, five of them in Connecticut with locations planned for Avon and Glastonbury, in addition to downtown Hartford.

At $4.2 billion in assets, PeoplesBank still describes itself as a community bank that keeps decision-making close to the towns and cities it serves. For instance, on loans, particularly to businesses, reviews on whether the loan is feasible can come in as little as week. That quick turnaround time distinguishes PeoplesBank from larger competitors who often have loan review committees elsewhere in Connecticut or another state.

When PeoplesBank opened its West Hartford branch in 2021, it came just as M&T was in the midst of seeking approval to acquire Bridgeport-based People’s United. The review was marked by controversy over job cuts and concerns about future lending.

The deal caused an uproar over the Labor Day holiday in 2022 when the bank’s accounts were merged, leaving some bank customers in Connecticut and elsewhere without access to their accounts.

The customer problems in the market stretched out for weeks and drew the ire of Attorney General William Tong who testified to state lawmakers in February that problems still linger.

As of February, Tong told legislators he had received 425 complaints in the aftermath of the systems conversion — 25 in the past year — and that “issues remain,” according to Tong’s written testimony.

“We continue to receive complaints from individuals reporting challenges managing a loved one’s money despite having the legal authority to do so under a power of attorney, because M&T curtailed their account access,” Tong testified. “Despite urging from my office, M&T refuses to address the problem broadly, insisting instead to wait for customers to complain and resolve the complaints on a case-by-case basis.”

‘Do our darndest’

The disruption in the market caused by the M&T-People’s United integration troubles opened up the opportunity for smaller competitors like PeoplesBank to woo dissatisfied customers.

Senecal said PeoplesBank also has hired lending staff that were previously with larger competitors. He wouldn’t name the competitors, but it is likely at least some new employees either resigned or lost their jobs in the M&T-People’s United merger.

PeoplesBank faces the challenge of balancing growth — the bank’s goal is to reach at least $6 billion in a couple of years — while adhering traditional community bank values with personal service to customers.

“As we grow it becomes more and more of a challenge because you become more decentralized and try to be efficient,” Senecal said. “Knowing that, we’re going to do our darndest to stay focused on the things that mean things to our customers.”

Banks also need the size to invest in rapidly-evolving technology and absorb the costs of government regulation, which stiffened in the wake of the Great Recession. But as a mutual bank — essentially owned by its depositors rather than stock shareholders — there are restrictions on the pace at which PeoplesBank can reasonably expand, depending on its profitability.

A mutual bank has more control over its destiny, shielded from an unwanted takeover that can happen to publicly-traded companies.

Senecal said the M&T-People’s United merger may have had another added benefit for PeoplesBank.

“We’re somewhat happy that there’s no longer confusion in the marketplace,” Senecal said. “Although I think it’s going to take a while, I think, for people to get used to the fact that we’re not them.”

About: PeoplesBank is a leader in innovation, corporate responsibility, environmental sustainability, and employee engagement. Our three LEED® certified offices are environmentally friendly, and we have financed more than $350 million in wind, hydroelectric, and solar energy projects.

As a community bank we have a unique ability to help the communities we serve through volunteer efforts and millions of dollars in donations to charitable and civic causes.

PeoplesBank is a mutual bank and therefore is responsible to our depositors, employees, and the community. This organizational structure allows us to focus on the long-term viability of the bank and the best interests of our customers. We currently have 20 banking centers located in Massachusetts and Connecticut.

Media Contact
Matthew Bannister, Senior Vice President, Marketing & Corporate Responsibility, PeoplesBank
413.493.8704
[email protected]