Banks closing branches

**james.hendrickson** · 12-03-2021, 06:56 AM

Originally posted by disneysteve View Post

For quite a few years, they seemed to be building new bank branches on nearly every corner around here. I thought it was nuts and questioned it at the time. The generation of people who do their banking at a brick and mortar building is dying out, replaced by those who mainly bank online. Even my wife and I, tail end boomers, very rarely step foot in a bank branch. We pay our bills online. We deposit checks with our phone. We transfer money electronically with Zelle, Venmo, Paypal, CashApp, etc. We pay for nearly everything with a credit card. I couldn't tell you the last time I withdrew cash from an ATM. The only thing I have gone into a bank for in the past year was when I needed a Medallion Signature and to have something notarized.

Anyway, the point of the thread is that over the past few weeks, I've noticed a few local bank branches have closed. Just this morning, I got an email that one of the nearby branches of our bank is closing 3/15. That branch had been one of the ones shut down during COVID and I honestly don't know if it ever reopened as I haven't been there probably since early 2020 or sometime in 2019.

Are you seeing this in your area? Have any banks closed? Are they still building new ones?

DisneySteve - well part of the situation is that banks derive a lot of their revenue from small businesses in addition to consumers. So, branch closures are at least impacted by those two revenue streams, not just consumer banking activities.

You raise a good point - which is competition. And the competition isn't just from apps like Zelle and Venmo. Frankly a longer strategic problem the banking industry will have to solve is competition from crypto companies. A lot of crypto companies can lend large amounts of money quickly and move money in a matter of hours - which isn't something that old fashioned commercial banks can do right now.

Another factor is interest rates. Crypto companies offer higher rates of interest on deposits because their rates are set by supply and demand, not by the Fed. Ask yourself this, all things being equal, would you keep your cash someplace that's paying 8% or 9% on USDs or would you keep it someplace that's paying .01%?

Now, granted, all things are not equal, but its still a clear choice when you think about it purely from the standpoint of returns.

**disneysteve** · 12-03-2021, 07:12 AM

James, that's all interesting. How is it that the crypto companies can pay 8% interest? That would mean they are lending out that money at even higher rates. Why would anyone borrow at 10 or 12% unless they couldn't qualify for traditional financing at much lower rates. In that case, how safe are those 8% interest rates if the borrowers are all super high risk?

A lot of what you said also doesn't really explain why so many physical branches are needed. I live within a 10 minute drive of 5 branches of my bank I think, maybe more. Surely one or two branches would suffice.

**Scallywag** · 12-03-2021, 07:17 AM

For a minute, I got a heart attack because I thought you meant that banks were going out of business!

I have seen that two local branches of Wells Fargo have closed in the last year or so. I don't expect them to come back because even the elderly / senior citizens have become used to banking online and no longer go into the local brick-and-mortar branches for anything. Checks can be ordered by phone or online, everything that can be paid online via credit cards / debit cards / Zelle etc, and for those few who still use cash, ATMS have popped up inside grocery stores so you don't need to go into an actual physical branch for 90% of your banking needs anymore.

The one thing I do worry about is that we've stashed our emergency savings in a credit union a county away. We have no ATM cards, no check books, no credit cards for our a/c there because the money is to only be accessible for "true emergency". However, we were recently advised that this particular credit union does not even offer bill pay online and only offers a debit card (no credit card). You can order checkbooks for a $10 fee per 100 checks (which is a lot, IMO). And there are only a handful of branches of this entity across the entire state! So the same factors that originally attracted me (because I wanted the money to not be readily accessible), is something that has started to worry me, including if there is such a thing as a "too small a credit union" and if I should move at least some of our savings to Wells Fargo where we keep our bill pay a/cs.

Ugh... decisions, decisions, decisions..

**ua_guy** · 12-03-2021, 08:01 AM

We were just talking about this the other day, granted, this is a single data point. A new Chase branch is taking over a decrepit Carl's Junior (fast food/burgers) restaurant. They tore it down to the studs 6 months ago and are just finishing up. It seems awfully expensive to opt for a free-standing location which had to basically be torn down first. Perhaps they are building new and planning on closing some older locations. I don't know. It's the opposite of what we've seen, which is the disappearance/consolidation of neighborhood bank locations.

DH and I moved our cash to credit unions, years ago, dumping commercial banks. We haven't walked into a bank branch in....I don't know how long. Mortgage--all done electronically now except signing (mobile notary). Perhaps with the rise of credit unions, commercial banks learned from their leaner models with regards to brick/mortar locations.

**AJSimon** · 12-04-2021, 12:26 AM

It's happening in LA. The local City National Bank closed in August. A credit union shut down at the start of Covid, and never reopened. A Wells Fargo located in local Ralphs also closed at the start of the pandemic, reopened a few months ago, and is now closed again (supposedly temporarily).

**srblanco7** · 12-04-2021, 12:59 AM

Have not done business with traditional banks for many years. We work with a local credit union and on-line banks. There seems to be a constant flux of banks opening and closing branches - a few years ago HSBC closed many of their local branches to focus on larger cities & commercial banking (as I recollect). There also seem to be branch closings related to banking consolidation (large regionals buying up smaller regionals and consolidating branches).

**comicguy** · 12-04-2021, 02:59 AM

In my area, Banks have been building new branches (much smaller format/footprint) and consoldating older branches. I am guessing more of a cost saving move than a consumer advatage. Better energy efferciany with smaller / newer building, and less staff needed (older braches always seemed to have 5-8 people staffing at a time, the newly built ones seem to have 3-4 staff at a time. At least in my area every time they open a new branch they close at least 2 branches

I visit my local credit union about once a year to get some cash for misc travel expenses when going out of town, I do use my drive thru at my local bank as well, mostly to make cash deposits (from returning deposit containers that extended family does not like to do, free mone for me!) but otherwise I go inside my local branch once a year to deposit whatever coin/change that I have acculated over the year (which seems to decrease every year as we do more and more transactions online.

**bjl584** · 12-06-2021, 02:31 AM

I haven't seen much of that where I'm at actually.
There are still brick and mortar banks at every turn.
I always ask myself who is going in there to support a physical location.

There have been quite a few shops and restaurants close up around me, mostly due to the pandemic.
It was surprising that some of the closures were national chain locations, especially the restaurants who have take out and online ordering.
It would seem that they used the pandemic as a reason to shut down some of the older and underperforming locations

**Fishindude77** · 12-06-2021, 05:33 AM

Branch banks are expensive, can easily invest $1mil + in getting the facility set up, then you need to staff it with at least 4-6 people year round, plus pay all of the upkeep expenses. Need to make a bunch of money out of a branch to justify that investment / expense, and the majority of a banks income comes from lending. With the ease of internet banking, online application processes, etc. banks can do loans without requiring the client to come into a physical building much, if at all. Makes much more sense in this day and age to have a centrally located headquarters location and employ lenders that are actively calling on clients, rather than sitting in the bank, waiting for one to walk in.

**Drake3287** · 12-07-2021, 07:01 PM

Yep, here in the Bay Area where I live, BofA has closed scores of branches that have been open for decades. Never in a million years would I have ever thought that was possible. It's a new world apparently.

Banks closing branches