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October 1, 2023

CT banks shed nearly 7% of deposits in 12 months

Wikimedia Commons M&T Bank's Connecticut headquarters in Bridgeport.

Federally insured banks in Connecticut lost nearly 7% of their deposits over the last year, mirroring a nationwide outflow of funds from the banking system.

The 52 federally insured banks doing business in Connecticut, including those headquartered inside and outside the state, reported $166.7 billion in combined deposits as of June 30, 2023, down 6.9%, or $12.4 billion from a year earlier, according to newly released data from the Federal Deposit Insurance Corp. 

Nationally, bank deposits contracted 4.8% over the past year to $17.3 trillion, as bank runs contributed to three large U.S. bank failures in the first half of the year, according to S&P Global Market Intelligence.

That led some depositors -- particularly individuals with accounts holding more than $250,000, the current FDIC insurance limit -- to move money out of the banking system.

This was the first year-over-year decline in deposits nationally since at least 1994, according to S&P.

In Connecticut, the decline in deposits was driven by some of the larger money-center banks, including Citibank, which shed 41% of its in-state deposits from June 30, 2022, to June 30, 2023. 

That was the largest decline for any bank in the state holding at least $1 billion in deposits. Citibank now has $3.1 billion in Connecticut deposits, making it the 10th-largest bank in the state. 

M&T Bank, the state’s third-largest lender, saw a 22% decline in Connecticut deposits over the past year to $19.4 billion, FDIC data shows. 

M&T Bank became a major player in Connecticut following its $8.3 billion takeover of People’s United Bank in April 2021. However, the New York-based lender faced significant criticism and complaints shortly after closing that deal, as numerous customers experienced problems when their People’s accounts were converted to M&T’s system.
M&T’s current deposit balance in Connecticut is down 32% from the $28.7 billion in deposits People’s United Bank held as of June 30, 2021, 10 months before the merger closed. 

M&T Bank now controls 11.6% of all Connecticut deposits, down from 13.8% in June 2022. 

Even the state’s market share leader, Bank of America, saw its Connecticut deposits shrink by 12% over the past year, to $39.6 billion. BofA still holds a comfortable market share lead, controlling 23.75% of all Connecticut deposits, but that’s down from 25% in June 2022. 

Connecticut’s second-largest bank, Stamford-based Webster Bank, saw one of the largest deposit increases over the past year. It held $32.9 billion in Connecticut deposits as of June 30, 2023, up 26.84% from a year earlier. 

Webster Bank now controls 19.73% of in-state deposits, up from 14.5% a year ago, FDIC data shows.

New York-based NBT Bank, which entered the market in 2020, saw an even bigger spike (about 28%) in Connecticut deposits to $47.2 million. That number will jump significantly again next year, following NBT’s August purchase of Lakeville-based Salisbury Bank, which reported $680 million in deposits as of June 30, 2023.

Branch trimming continues

Connecticut banks also continued to trim their branch counts over the past year. 

The 52 banks operating in the state closed a net 36 branches from June 30, 2022, to June 30, 2023, a 3.6% decrease. 

Most of those closures were attributed to M&T Bank, which shuttered a net 26 branches over the past year, which represented 15.6% of its brick-and-mortar presence in the state. 

The biggest outlier was JPMorgan Chase, which added six new branches over the past year as part of a broader growth strategy.

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