Banks cut jobs again

Connecticut banks pared jobs a second straight quarter, another worrisome signal for the economy even as one bank”™s survey suggested few businesses expect to cut jobs this year, and as the president of the Federal Reserve Bank of New York predicted moderate and strengthening growth.

Banks cut 330 jobs in Connecticut in the first quarter, a 2.4 percent decrease from three months earlier even as banks in the rest of the nation essentially held employment flat, according to the Federal Deposit Insurance Corp.

Connecticut banks”™ workforce numbers remain above their levels of a year earlier, but at less than 1 percent.

JPMorgan Chase & Co. Inc., which has absorbed derision in the past several weeks following massive trading losses, is the lone national bank with a major Fairfield County presence to continue to add U.S. jobs, with more than 3,800 employees in the first quarter, a nearly 2 percent increase.

The local job cuts came even as bank profits in Connecticut plunged by more than a third from the first quarter of 2011 to $160 million, with loans down slightly and deposits up significantly.

“The headwinds retarding recovery are well known,” said William Dudley, president of the Federal Reserve Bank of New York, in a late May briefing on the regional economy. “Consumers have been de-leveraging in response to the large losses in wealth generated in large part by the collapse in home prices. Housing activity remains depressed for many reasons. These include the large, ”˜shadow”™ inventory making its way through the foreclosure pipeline, tight underwriting standards for new mortgage origination and the sharp slowdown in household formation.

“Although the corporate sector as a whole is now reasonably healthy, there still is a significant constraint on the availability of credit to small business,” Dudley said. “The uncertainty about how Congress and the (Obama) administration will address the 2013 federal ”˜fiscal cliff”™ is likely to inhibit hiring and investment by business.”

HSBC”™s exit from the Fairfield County market may have contributed to the uneven performance by state banks in the aggregate in the first quarter, after First Niagara Financial Group Inc. bought up HSBC branches here in May and stated that HSBC shifted some continuing business to New York branches. But HSBC held a slim share of the statewide deposit and loan market, limiting its capability to move the needle in any significant way.

People”™s United Financial Inc. trimmed another 335 jobs across its Northeast operations in the first quarter, a whopping 6 percent drop that left the Bridgeport-based bank with fewer than 4,900 workers in all as reported to FDIC on a full-time equivalent basis, even as deposits and loans increased during the quarter. People”™s United was coming off a fourth quarter last year in which it shed some 170 jobs.

On paper, banks continued seeing improved performance from their loans, as net charge offs dropped to just under 0.4 percent of all loans outstanding, down from more than 0.6 percent in the fourth quarter last year; and as nonperforming loans dropped by a more modest margin to below 2.5 percent of all loans outstanding.

This spring, First Niagara released its first annual survey of business owners in southwest Connecticut, reporting that just 9 percent of those polled expect to cut jobs this year, and 28 percent expecting to increase their employee bases.

“Many are focused on growing their businesses in a financially realistic way by increasing their workforces and investing in fixed asset acquisitions,” David Ring, First Niagara”™s New England regional president based in New Haven, said in a statement.