March 11, 2013

The number of in-store bank branches has fallen by 4.6 percent since June 30, 2011 to a total of 5,750, according to new research from Charlottesville, Va.-based SNL Financial.

According to SNL, while in-store branches have advantages, such as being located in high-traffic areas, they also have inherent disadvantages, such as being small sized and generally not offering a wide range of financial products.

"In-store branches have declined in recent years as banks and thrifts look for ways to maximize efficiency," SNL wrote in its report. "With slack loan growth, squeezed margins and greater regulatory costs, many banking institutions must cut back on overhead expenses to grow, or even maintain, profits. One way to trim those costs is to shut down underperforming branches."

U.S. Bank operated the most in-store branches of any financial institution as of March 4 of this year, with a total number of 766, according to SNL data.

In terms of total deposits, Wells Fargo was the top bank with $13.75 billion in total deposits at in-store branches as of June 2012. According to SNL, of the seven in-store branches with deposits in excess of $100 million as of last June, Wells Fargo operated four of them, including the largest. That branch is in a Vons grocery store in Escondido, Calif.

According to SNL, Wal-Mart hosts the most in-store branches, with a total of 1,531 in its stores as of March 4. It also holds the most deposits, with $6.88 billion as of June 30, 2012. The fastest growing business to house in-store branches is Giant Food, a supermarket chain based in the mid-Atlantic region. Its deposit base expanded to $249.6 million from $172.4 million over the past two years, the report found.

[Related: Branches Remain a Key Channel]

Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as ...