People’s market share down

Even as deposits rose 3 percent in its own backyard of Fairfield County, People”™s United Financial Inc. ceded a half-percentage point of market share to rivals shopping for customers in one of the wealthiest districts in the United States.

Even as People”™s United continues to scout acquisitions in other states, it marked the fifth straight year People”™s United has lost market share on its home turf, and the eighth straight year the Bridgeport-based company has dropped in Connecticut, according to data published this month by the Federal Deposit Insurance Corp.

At the same time, People”™s United won back some of the market share it lost in Vermont following its 2008 acquisition of Chittenden Corp. ”“ and People”™s United is now run by a Chittenden alumnus, CEO Jack Barnes, who has vowed to make the company more customer friendly.

People”™s United was scheduled to discuss its third-quarter results after press deadline; at a September conference sponsored by Barclays Capital, Barnes highlighted the company”™s still-leading market share in Fairfield County as one of the bank”™s strengths.

The FDIC deposit market share data is far from a precise measure of how a bank is faring locally; as a spokesman with JPMorgan Chase & Co. points out, it amounts to a snapshot in time, and the figures can be skewed significantly by banks listing deposits at a local branch that were originated elsewhere, or shifting them out of a district.

And in a conference call this month with investment analysts, Webster Financial Corp. CEO James Smith noted that those deposits can be heavily influenced by cyclical events ”“ for instance, deposits by municipal governments as tax collections come in.

In the aggregate, however, they provide one indicator of a bank”™s appeal and efforts to win customer loyalty ”“ particularly in the case of national figures. In the case of JPMorgan, as the company dropped back behind Wells Fargo Bank and Bank of America Corp. in Fairfield County, so too were its deposits dropping in New York and nationally. That trend continued in the recently concluded third quarter, when average deposits were down 1 percent from the second quarter.

It also shows changing dynamics ”“ after HSBC quadrupled deposits in just one year via a dozen new branches in Fairfield County, a year later the company had retrenched slightly, closing two branches as deposits shrank 3.8 percent.

Excluding the impact of acquisitions in the turmoil following the market collapse of 2008, a pair of banks from New Jersey and New York registered the biggest gains in Fairfield County as measured by percentage gains in deposits and market share. Paramus, N.J.-based Hudson City Savings Bank grabbed a 0.8 percent gain in market share, giving it a 3.7 percent share overall. Yonkers, N.Y.-based Hudson Valley Bank, meanwhile, booked triple the deposits it held just a year earlier, giving it $79 million total.

People”™s United retains a 17.3 percent market share in Fairfield County, down from 25.4 percent a decade earlier. During that intervening period, People”™s United has seen its market share drop even as it has shifted its Connecticut strategy to emphasize branches embedded in Stop & Shop Supermarkets. That agreement comes up for renewal at People”™s United”™s option in 2012, and the company has yet to indicate whether it will exercise that option.

Whereas People”™s United deposits were up 3.1 percent in Fairfield County overall in fiscal 2010, 14 Stop & Shop branches managed a 0.4 percent gain during that period (excluding a branch in Trumbull for which FDIC data could not be ascertained). While a pair of those branches recorded double-digit increases, they made up two of just three branches to exceed People”™s United”™s overall deposit growth in Fairfield County.

In a July regulatory filing, People”™s United indicated that in addition to the convenience those supermarket locales provide its existing customers, its presence in Stop & Shop also provides advertising to prospective customers.

In the same filing, however, the bank theorized that any decision to shut down those supermarket branches would result in only a minimal runoff of deposits, on grounds customers would simply patronize standalone People”™s United branches near those markets.