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Branch Closures Revved Up in Late 2012, Study Finds

The pace of branch closings in the U.S. more than doubled in the last quarter of 2012 as banks looked to cut costs, a new report by SNL Financial found.

A new report by business intelligence firm SNL Financial shows that the trend of increasing branch closings accelerated in the last quarter of 2012. U.S. banks closed more than 500 branches in the final quarter of 2012, the survey found, while only opening 274 branches for a net decrease of 229 branches, more than doubling the net decrease from the previous quarter.

The report cited Michael Driscoll, senior vice president of the U.S. financial institutions group at credit rating agency DBRS, as putting part of the blame for the spike in branch closings at the feet of the Federal Reserve. The Fed's efforts to keep interest rates low for the foreseeable future means that the value of banking deposits that can be invested in securities is very low right now, according to Driscoll. "It make smooch more economic sense to close branches at this point in the low-rate cycle, especially when you don't need the funding," Driscoll is quoted as saying in the report.

And Driscoll expects an even faster pace of branch closings in 2103 as banks continue to cut costs and customers do more transactions via electronic channels. "Every bank is trying to cut expenses because revenue growth is just so difficult to get," he said. "The branch itself will never fully go away, but technology is moving ahead and people are getting used to it and adopting it."

[See Related: The Branch Reborn]

Bank of America experienced the largest increase in closures, shutting down more than 50 locations during the last three months of last year. "We're always adapting our banking center network to fit our customers' needs and changing behaviors," Tara Burke, a spokeswoman for Bank of America, said in the report, adding that adapting can often mean consolidating branches that have an overlap in coverage. Capital One, Bank of Montreal and BB&T are some of the other banks noted in the study for their high number of branch closures in the last quarter of 2012.

But not all banks are closing branches. The report said that JP Morgan Chase led the way in terms of branch network growth, increasing their net number of locations by 16 in the quarter. The bank is focusing on florida and California as geographies for increasing branch locations, the report found.

Jonathan Camhi has been an associate editor with Bank Systems & Technology since 2012. He previously worked as a freelance journalist in New York City covering politics, health and immigration, and has a master's degree from the City University of New York's Graduate School ... View Full Bio

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1/22/2013 | 6:53:56 PM
re: Branch Closures Revved Up in Late 2012, Study Finds
I think it is really disingenuous to blame regulation for branch closings. I don't know if it's in the purview of this research, but at least in the NY metro area there was a ridiculous amount of branch expansion pre-financial crisis. This is a pendulum swing we've seen in banking many times before (focus on branch, less focus on branch). And I'm sure we'll see it again, as the role of the branch evolves.
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