Bank branches face pruning

As Fairfield County”™s largest bank prepares to close branches, retail banks are suddenly confronted with a rapidly slowing economy that could crimp the loans and deposits for their own branches.

Since June 2001, banks have added 80 new branches in Fairfield County, to a total 390 branches, up from 310 at the time of the 2001 slowdown. Banks have had good reason to be bullish behind the backhoe ”“ local deposits have increased nearly one third in that time period to $24.1 billion, exceeding the 20 percent growth rate in branches.

In a March survey, however, the New York Federal Reserve said bankers are reporting a lower rate of deposit and overall lower demand for most loans, although for the first time in four years banks experienced an increase in refinancing activity. Last week Boston-based Celent L.L.C. predicted banks nationally will cut 200,000 jobs over the next 18 months, about 10 percent of the entire sector.

The credit crisis claimed its first local retail-banking victim this month, after People”™s United Financial Inc. detailed plans to shut 20 branches and lay off 170 workers. The bank plans to eliminate another 250 jobs through a mix of worker attrition and a freeze on some hiring it had budgeted. People”™s United expects the restructuring to pare $57 million from its annualized expenses.

The Bridgeport-based bank has more than 60 branches in Fairfield County, many of them located inside Super Stop and Shop grocery stores.

The January acquisition of Vermont-based Chittenden Corp. pushed People”™s United”™s payroll from 2,600 full-time workers at year end, to nearly 5,000 as it exited the first quarter.

People”™s United did not immediately specify the location of branches slated for closure, but according to press reports the company is closing five branches in Vermont, the base of Chittenden Corp. Another three branches are slated to be closed in New Hampshire, where Chittenden”™s Ocean Bank subsidiary operates. That would leave a dozen still to close.

People”™s United had announced plans to open more than a dozen branches in Westchester County, N.Y., this year. A spokesman told the Connecticut Post that the bank intended to keep the two Westchester branches it has already opened, but did not indicate whether it intends to continue opening branches there at the pace it originally intended.

Bank of America Corp. has the next-largest number of branches with 50 in all, while Wachovia Corp. is the second largest holder of deposits. Both banks have announced job cuts since last October, but have not detailed specifics on operations.

In the current decade, Waterbury-based Webster Financial Inc. has nearly tripled its branch presence in Fairfield County to more than 30 branches, making it by far the most aggressive bank in establishing offices here. Stamford-based Patriot National Bancorp Inc. has grown from three branches to 13, while increasing its work force 40 percent in the past year to 150 employees.

In separate news, People”™s United Financial Inc. disclosed last week that it is paying a $9 million benefit to the estate of its former chief executive officer John Klein, who died in January after a relapse of cancer. That amount does not include proceeds from a life insurance policy the company had to benefit Klein”™s beneficiaries.