Data Snack: US bank branch closures reach a new record high in 2021
- The number of US bank branch net closings rose by nearly 40% year-on-year to 2,927 branches in 2021.
- The pandemic pushed banks to reduce their footprint and focus more on their digital operations.
US banks are closing down shop on main street as customers increasingly turn to more digital financial experiences, making physical branches less useful for financial institutions.
The number of US bank branch net closings rose by nearly 40% year-on-year to 2,927 branches in 2021, according to S&P Market Intelligence data. The number reflects around 4,000 branch closings, offset by around a thousand openings.
As the pandemic forced consumers to stay at home and interact with their financial providers mostly online, banks responded by reducing their branch footprints and focusing more on developing their digital operations.
Other factors contributing to this trend are industry consolidation and a low interest rate environment, which has pressured banks to tighten their expenses.
The net number of branch closures has been increasing over the past three years.
“We anticipate that the downward trend in branches will continue for a number of years... as more of the transaction-oriented aspects of banking are done digitally,” Gerard Cassidy, head of U.S. bank equity strategy at RBC Capital Markets, told CNBC.
On a relative basis, Huntington Bancshares closed a net 221 branches or 16% of its footprint, recording the most net branch closures among banks with at least 1,000 branches.
Among community banks, Olympia, Washington-based Heritage Financial Corp reduced its footprint by 18% in the year. Management said that the bank saves around $250,000 per year by closing one branch, noting that technology made customers “a lot stickier than they used to be.”
At the other end of the spectrum, JPMorgan Chase took the lead by opening the most branches in 2021 with 169 new locations. This was more than three times the number of new branches Bank of America opened. Nevertheless, both of the banks’ footprints shrank by north of 4,000 branches last year.