The commercial banking industry in Fairfield County is solid, if not particularly spectacular, according to banking executives here.
“It”™s orderly and steady,” Patriot Bank President Richard Muskus, Jr. in Stamford said. “It”™s right on target with what we predicted, almost to the dime. Growth is increasing ”” not massively, but it”™s certainly better than not increasing.”
“Our business has been up somewhat in Fairfield County,” said Michael Weinstock, market president for Connecticut at M&T Bank. “Demand has been fairly consistent over the last 12 to 18 months. There”™s optimism at play that derives in part from what”™s going on at Pratt & Whitney, Electric Boat and the other defense industry players, and there”™s still a pretty positive feeling over the (Trump) administration”™s pro-business attitude, which filters down to other sectors.”
At Newtown Savings Bank, “We are witnessing reasonably strong commercial banking demand in the markets we serve,” said Anthony F. Giobbi, senior vice president and chief lending officer, “There is significant refinancing activity in commercial real estate, with borrowers seeking to lock in longer terms and rates.”
“We are also experiencing some margin compression due to competition among banks for quality loans,” Giobbi added. “Since the election, the underlying interest rates that lenders use to determine the interest rates to be charged to customers have increased, but banks have absorbed much of that increase by lowering the interest spread they charge to make up the rate to customers.”
As predicted earlier this year, the Federal Reserve”™s March 15 interest rate increase of 0.25 to 1.0 percent has not had an adverse effect on the banking business. The Fed expects to raise the rate to 1.5 percent by year”™s end, most likely again in 0.25 percent increments, a strategy that Fairfield County-based bankers said shouldn”™t result in particularly troublesome negatives for themselves or their clients.
“To remain competitive, we will price our loans accordingly,” said Muskus.
With builders feeling a little more confident, commercial banks are experiencing moderate demand for new home construction finance. At the same time, the general trend among real estate investors toward multifamily housing continues to grow.
“Not every bank is in that market right now, since they feel they”™re full up on construction,” said Weinstock. “We”™re doing the opposite. We see the cranes in places like Stamford and Norwalk, and have for some time. The multifamily market seems sustainable.”
“Norwalk particularly is one of the markets looking for newer multifamily buildings,” said Muskus. “And there”™s a wide range of price tags there, in the $1,500-2,000 range” for monthly apartment rental rates.
Weinstock said that demand for multifamily domiciles in the Stratford/Shelton area are starting to rise, while Giobbi noted similar activity in Danbury. But Fairfield County still lags both the city and county of New Haven, they noted.
As for the banks themselves, none are necessarily looking to add branches but are instead relocating or adapting existing ones.
At Newtown Savings, Giobbi said that most of the bank”™s moves have been in New Haven County. Last year it relocated its Southford branch to Oxford and opened a loan production office in Hamden. The bank will be relocating its main office branch from 39 Main St. to the new Village at Lexington Gardens development on Church Hill Road in Newtown later this year, he said.
Patriot is in the midst of repositioning many of its branches as smaller, more efficient operations, partly through the introduction of interactive teller machines, which can extend banking hours while adding personality and the ability to conduct a wider variety of business to generic ATMs.
Muskus said that the bank”™s first ITM at the Trumbull Mall has received mostly positive feedback from customers. Patriot also plans to introduce ITMs at several existing branches this year.
“This also allows us to staff differently, and we no longer need to look for big offices located at big intersections in the cities we serve,” Muskus said. “We can effectively work out of smaller offices, which works well in terms of customer convenience.”
At M&T, “We”™re still working with the integration of Hudson City,” a bank acquisition valued at $5.5 billion when it was finalized in 2015, said Frank Micalizzi, M&T”™s regional president for the Connecticut, Westchester, Rockland and Bronx markets. “So we have no plans at the moment to open new branches in Fairfield County. However, we are very opportunistic and will continue to look for acquisitions and new buildings to help serve our consumer clients.” Micalizzi said that the bank is opening a branch in The Bronx in May.
Finding commercial lending talent is a perennial problem.
“Hiring remains a challenge,” Giobbi said. “There is always demand for good commercial lending talent, but the banks have not done a particularly good job of training and developing the next generation of commercial lenders. We see an opportunity to partner with local university business schools to develop programs to train the next generation of bankers.”
“There”™s definitely a scarcity of new talent,” Muskus agreed. “When they become available, the banks compete very hard for them.”
“Finding good talent across the board, in any industry, can be difficult,” said Weinstock. “Identifying and nurturing someone who”™s equally adept at lending, marketing and new-client acquisition isn”™t always easy. But we are one of the few banks that has a formal training program, where we bring in talented young people and hopefully groom them to be long-term employees.”
