Connecticut-based People’s United Bank said yesterday it would close 140 branches in Connecticut and New York located inside Stop & Shop stores.
People’s United Bank’s Chairman and CEO Jack Barnes said Thursday that the acceleration of digital banking and shifts in retail trends contributed to the decision.
“Although our Stop & Shop relationship has provided meaningful value to the bank and its customers over more than two decades, this decision provides us the opportunity to further optimize our branch network while providing the same level of personalized service across each of our channels,” Barnes said in a conference call to discuss the bank’s fourth quarter earnings. “In addition, cost savings achieved over time by not renewing these contracts will enable further investment in our digital capabilities and traditional branch network.”
The cost to operate the Stop & Shop branches is between $60 million and $70 million, People’s United chief financial officer, David Rosato, said during the call.
People’s United, which has branches throughout Massachusetts, has three branches in another supermarket, Star Market, in Cambridge, Newton and Waltham, branches gained from its acquisition of Belmont Savings Bank. These locations are not affected.
While the contracts with Stop & Shop expire in January 2022 for Connecticut and mid-2022 for New York, the store branches might not all close next year. Barnes said the contract terms provide for scheduling the closings by county, adding that the bank was still working with Stop & Shop on the schedule.
Even though the branches will close, Barnes also said People’s United is still working on renewing a contract with Stop & Shop. He added that given retail trends, he did not expect another bank to take over the vacated branch locations.
Connecticut’s 84 Stop & Shop locations make up about half of the People’s United branches in the state. Another 56 Stop & Shop branches will close in New York, many of them on Long Island.
About 75 percent of the Stop & Shop branches are within five miles of another People’s United branch, which Barnes attributed to People’s United’s “hub-and-spoke” approach to its branch footprint. He also said that recent bank acquisitions, including Farmington Bank and United Bank, had allowed the bank to better optimize its branch footprint and provide more drive-up windows.
Barnes also noted that customers of the Stop & Shop branches are more digitally active than other branch, customers, with only 10 percent of deposit balances associated with customers using Stop & Shop branches in 2020 belonging to customers that did not use a digital channel in 2020.
Citizens Bank, which has branches in Stop & Shop locations in Massachusetts, announced last year it would close some of its supermarket branches.
People’s United had fourth quarter net income of $207.7 million, or $0.49 per common share, compared to $137.5, or $0.31 per common share, in the fourth quarter of 2019.
