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Updated: January 13, 2020 5 to Watch in 2020

Barnes to oversee growing People’s United Bank empire in 2020

HBJ Photo | Matt Pilon People’s United Bank CEO Jack Barnes. People's third-quarter 2020 profits beat last year's.
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As chairman and CEO of People’s United Bank and its parent, People’s United Financial, Jack Barnes has a growing empire to manage from his 16th-floor corner office in Bridgeport that overlooks the harbor below.

It includes more than 400 brick-and-mortar branches across New England and New York, three national leasing businesses, a mortgage warehouse lending unit, full-service insurance brokerage and more.

“We obviously have a very big footprint and we run a lot of different businesses,” said Barnes, 64, in a recent interview. “Think of it as a $60-billion financial services firm that does a lot of different things.”

However, Hartford County has drawn an increasing amount of Barnes’ focus, as People’s United over the past two years acquired Farmington Bank and United Bank, previously two of its top competitors in this region.

The deals have put People’s United neck-and-neck with its rival, Webster Bank, in Hartford County deposit market share (up from sixth place in 2018) and helped it jump Webster in the statewide market share rankings, too.

People’s United is now the largest Connecticut-based bank, and second largest here overall behind Bank of America.

Barnes said the Hartford market, like his bank’s Fairfield County stronghold, has “very good demographics and density” and a number of well-established companies to provide loans and other services.

People’s United has been in this market for about 40 years, but the expansion was a chance to takeover two long-time competitors that Barnes and his team knew well and to squeeze savings by closing a total of 33 overlapping branches.

“We saw some opportunity for efficiency in going through the process of consolidating the branch footprint,” Barnes said. “That obviously takes cost out.”

Barnes said it will be important this year to retain deposits and customers at its recently acquired branches, as smaller competitors seek to benefit from the churn.

People’s United has gotten good at integrating acquired banks, Barnes said, and it sticks to a playbook it’s developed for how to manage technology conversion and outreach to customers and employees. Barnes said the approach has helped the bank keep more than 90 percent of the accounts at acquired branches, as well as hang on to many of its commercial-loan relationships.

People’s United has passed Webster Bank in deposit market share before, most recently in 2015, albeit temporarily. So things can always change, but market-share bragging rights matter to Barnes, he said.

“That presence gives you a better opportunity to talk with more customers and hopefully grow the business,” he said.

Barnes first arrived at People’s United in 2008 as chief administrative officer following the bank’s $1.9 billion acquisition of his former employer, Vermont-based Chittenden Corp.

He resides locally in Shelton but also spends time in his family’s homes in Burlington, Vermont, and Florida, which he and his wife — with three grown children — recently built.

More M&A?

The banking industry continues to consolidate, as banks try to accumulate capital, invest in new technology and keep their shareholder dividends healthy. So far, People’s United has been an acquirer, but some in the industry wonder if it’s perhaps positioning itself to be bought.

Barnes, unsurprisingly, wasn’t willing to speculate.

“I would say we’re always building relationships and we try to be opportunistic about M&A opportunities,” he said.

However, he said some investors, particularly those who are risk averse, would probably view the growing concentration of People’s United’s presence in the Northeast — where the recession-resistant “eds and meds” sectors help moderate economic upswings and downswings — as a good thing.

People’s United is particularly strict about loan underwriting and credit quality, providing further bait for cautious investors, said stock analyst David Bishop of Montana-based financial services firm D.A. Davidson.

“They take very shrewd credit risks,” Bishop said.

As he looks ahead to 2020, Barnes said People’s United will certainly consider future acquisitions.

“A lot of times boards get to a crossroads where they’ve got to decide whether it’s wiser to go it alone and what that challenge looks like, or whether they should be open-minded to talking to somebody about selling,” he said. “And when that consideration happens, there are many potential companies where I would like them to think of us and at least consider talking to us.”

A key priority is to improve profitability, which could serve to boost the company’s market cap.

While People’s United has more than doubled its total assets since Barnes took over as CEO in July 2010, its market cap over that same period has grown by about 35 percent, to $6.8 billion as of press time.

Meantime, the bank’s stock price has risen only 21 percent since 2010 from about $14 to $17 today.

Barnes attributes the bank’s share performance partly to stock-market trends — some investors may be worried about the next downturn, and the banking sector trades at lower multiples to earnings than it used to.

People’s United has maintained above-average shareholder dividends, he said, but hasn’t made as much progress on share value as he’d like.

“We’ve made good, steady progress over the last 10 years and we’re proud of that, but we see others in the industry that do better than we do, so we’re constantly challenging ourselves to continue to make progress,” he said.

Bishop said the bank has been good at managing its funding costs in a low-interest rate environment, which it must continue to do without eroding its deposit base.

He said the bank’s more dominant market share should help it have more influence in loan pricing, particularly on the commercial side.

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