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Connecticut banks saw the pandemic-related deposit surge continue in the fourth quarter, as the year ended with an 18 percent increase in deposits compared to 2019.
According to the FDIC’s latest state banking performance summary, Connecticut’s 34 FDIC-insured institutions together held $108.14 billion in deposits at the end of 2020, an 18.3 percent increase over 2019. The fourth quarter also saw more cash flow into banks as deposits increased 3.4 percent compared to the third quarter.
FDIC Chair Jelena McWilliams said in a statement announcing the latest FDIC Quarterly Banking Profile that deposit growth accelerated nationwide in the fourth quarter, “reflecting persistently high savings rates and lower spending.”
She added that fourth quarter net income rose nationwide, primarily due to lower provision expenses for credit losses and higher noninterest income, while the net interest margin remained at a record low level.
“While banking industry income for the full year 2020 declined from full year 2019 levels, banks remained resilient in fourth quarter 2020, consistent with the improving economic outlook,” McWilliams said.
More than two-thirds of Connecticut banks did not report earnings gains in the fourth quarter, but banks did see improvements during 2020. About 38 percent of banks reported earnings gains in 2020 compared to 57 percent in 2019. But at the start of the pandemic, only 14 percent reported earnings in the first quarter. By the third quarter, 23 percent of Connecticut banks had reported year-to-date earnings gains.
Almost all Connecticut institutions are now considered profitable, with just 8.8 percent classified as unprofitable. In the first quarter, 34.4 percent of institutions were unprofitable.
Connecticut’s FDIC-insured institutions together had net income of $1.04 billion in 2020, down 22 percent compared to 2019, when banks had more than $1.3 billion in net income. The fourth quarter was the best performing quarter in 2020, with more than $360 million in net income, a 25 percent increase over third quarter results.
The net interest margin at Connecticut institutions was down to 3.03 percent at the end of the fourth quarter, compared to 3.07 percent in the third quarter and 3.33 percent at the end of 2019. Connecticut institutions saw a collective 3.47 percent yield on all earning assets in 2020, down from 4.23 percent in 2019.
Connecticut’s banks had total assets of $130.24 billion at the end of 2020 compared to $118.83 billion in 2019, a 9.6 percent increase. Banks have reported the effects of the Paycheck Protection Program as a factor in rising assets. Total loans and leases were $89.8 billion in 2020, up 3 percent year-over-year from $87.2 billion.
The number of Connecticut banks dropped by one in 2020, with Rhode Island-based Centreville Bank acquiring Putnam Bank. The number of full-time-equivalent employees at Connecticut institutions fell year-over-year from 14,345 at the end of 2019 to 13,704 at the end of 2020. There were 13,795 employees in the third quarter.
