Places That Lost the Most Bank Branches
Not only are banks shuttering many of their branches across America, but they’re also declining to build more branches to accommodate population growth in others. In a new study by MagnifyMoney, we found that that there were 7% fewer bank branches in 2017 than there were a decade earlier in America’s 100 biggest metros. At … Continue reading Places That Lost the Most Bank BranchesThe post Places That Lost the Most Bank Branches appeared first on MagnifyMoney.
Posted — UpdatedIn a new study by MagnifyMoney, we found that that there were 7% fewer bank branches in 2017 than there were a decade earlier in America’s 100 biggest metros. At the same time, the population of those metros grew an average of 11%, so the number of branches per capita actually dropped an average of 16%.
For the analysis, we looked at a combination of data, including a record of active bank branches from the U.S. Federal Reserve and population data from the U.S. Census Bureau American Community Survey.
Even in some fast-growing places, we found banks are shuttering brick-and-mortar locations at a pretty good clip. It’s a lot easier to not build new branches than it is to close existing ones, so it seems likely that failure to keep pace with a growing population fits nicely into a strategy of reducing branches for a growing customer base.
There are several reasons for this trend, but here are the big ones.
Merging banks means less need to compete through branch access
The word “synergy” is a popular one for the Mergers & Acquisitions crowd, and the banking world has been pretty gung-ho about mergers over the last few years. Indeed, the FDIC reports that that the number of individual banking companies that conduct their business with branches dropped an astounding 25% between 2006 and 2016, thanks to 2,447 mergers among commercial banks and 349 among savings banks. The newly consolidated banks don’t need branches that cover the same areas, and they may find that the reduced competition means they don’t need to fight for customers with more storefronts.
Branch access isn’t as important to banking customers as it used to be
While many people find walking into a bank and talking to a professional behind a large desk a reassuring way to deal with the uncertainty and anxiety around buying financial products and services, more and more people prefer to gather as much information as they can across multiple banks, lenders and other businesses in the financial products space.
One exception to the trend
Places that lost the most branches
1 – Lakeland, Fla.
2 – Buffalo, N.Y.
3 – Baltimore
4 – Stockton, Calif.
5 – Melbourne, Fla.
Palm Bay and Melbourne sit due east of Winter Haven, and while CenterState doesn’t appear to have a stake in this community, plenty of other community banks are consolidating in central Florida. Melbourne has changed at a similar rate to Stockton: 18% fewer branches, 8% more people, leaving 24% fewer branches per capita, but that still leaves them with 20 branches per 100,000 people.
Places that saw an increase in branches
1 – El Paso, Texas
2 – Raleigh, N.C.
Like other many other southern cities, Research Triangle has seen a population explosion of 32% in the last decade. The addition of 24 branches (9%) doesn’t cover the distance, which means the number of branches per capita actually dropped by a substantial 17%.
3 – Oklahoma City
Oklahoma City is something of an anomaly, in that they added more branches to their already higher than average (per capita) number (33 per 100,000 residents in 2007). That may be a function of the sheer land mass – the metropolitan statistical area comprised over 5,500 square miles. They’ve added 18 branches over the last ten years, an increase of over 5%, but in a familiar story, that increase didn’t keep up with the 17% population increase.
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Methodology:
Loss of branches data were reported by the U.S. Federal Reserve and were matched at the constituted MSA level to 2016 (most recent available) and 2007 populations from the U.S. Census Bureau American Community Survey. The results were limited to the 100 largest constituted MSAs, by population.
Statistics regarding the number of individual institutions was derived from “Statistics At A Glance,” as of Sept. 30, 2017 table and Table CB03 from the FDIC.
For the sake of clarity, we used the first city name and state name listed in the metropolitan statistical area designation, which we understand to be the most populated component (e.g., “St. Louis” for “St. Louis-St. Charles-Farmington, MO-IL”), except where a secondary city was deemed more familiar (e.g., “Fort Myers, Fla.” for “Cape Coral-Fort Myers, FL”).
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