Bank branch closures doubled during COVID. Here’s where they shuttered in Charlotte
The rate of bank branch closures doubled during the pandemic, a new study says — and Charlotte’s biggest banks are among those shuttering the most locations.
A February report from the nonprofit National Community Reinvestment Coalition found that banks doubled the rate at which they closed branches during the pandemic, with more than 4,000 locations closing across the country since March 2020.
Charlotte lost 17 locations or 3.3% of its branches from 2017 through last year, according to the study, which used data from the Federal Deposit Insurance Corporation.
But across the country,Charlotte’s largest banks — Bank of America, Wells Fargo and Truist — closed hundreds of branches.
All three banks ranked in the top five for total closures from 2017 through 2021: Wells topped the list with 993 branches closing, followed by Truist with 919 closures. Bank of America ranked fifth, closing 379 branches during the period.
It’s part of an industry-wide trend to cut costs, respond to an increase in digital banking and address overlaps in mergers at institutions like Truist and U.S. Bank.
“I don’t see any indication that these closures are going to slow down,” said Jason Richardson, senior director of research at the coalition. “Banks are on a closing spree.”
Why branches are closing
The number of bank branches across the country has been on the decline since about 2008, said Nathan Stovall, a Charlotte-based banking analyst with S&P Global.
According to NCRC data, there were more than 94,000 bank branches across the country in 2008. That number had fallen to 79,013 as of last June — a 16% drop.
In the wake of a financial crisis that crippled the economy, “there was greater pressure to be efficient,” Stovall said. The country’s largest financial institutions shrank their branch network to trim costs.
The rapid rate of recent closures has been driven by two factors, Richardson said.
The first has to do with industry consolidation: more banks are merging, which results in more locations closing. Researchers at NCRC found mergers and acquisitions drive most closures.
Take, for example, Charlotte-based Truist: the $66 billion merger of SunTrust and BB&T to form Truist was the biggest such deal in the banking industry since the 2008 crisis.
It also resulted in hundreds of closures across the Southeast, including several locally, as the former banks addressed overlap in their branch network.
The second reason for closures is probably more evident to consumers, Richardson said — in an age where you can deposit a check, make a transfer or apply for a mortgage from your computer or smartphone, there are fewer reasons to visit a branch.
The pandemic accelerated that shift to digital banking and tightened banks’ profits during a short recession, he added.
“Especially during the third quarter of 2020, closures (across the country) just skyrocketed,” Richardson said.
Bank branch closure concerns
Richardson and other NCRC researchers have been monitoring bank branch closures for years. When closures occur this rapidly, it can threaten access to capital in some marginalized communities, he said.
Small business lending suffers when a neighborhood loses a bank branch, Richardson said. Branches also remain particularly important for rural, older and lower income customers.
He pointed to the Community Reinvestment Act, which encourages banks to meet all types of credit needs in the places they do business, including low and moderate income neighborhoods.
“The (act) instructs banks to serve the credit needs of the entire community,” Richardson said. “Not just the ones that have a cell phone or or are comfortable with online banking.”
Are bank branches dying?
In Charlotte, branch closures have continued in 2022.
Truist confirmed it would shutter five more branches in the Charlotte area as it finalizes its merger. Bank of America has closed a University-area branch and plans to close another location on Carmel Road, according to regulatory filings.
Customers can expect banks to continue shrinking their branch networks, Stovall said. But he doesn’t think they’re going extinct.
He points to JP Morgan Chase as an example: the New York-based bank opened its first branch in Charlotte across from the Bank of America headquarters here in 2020.
But instead of planting a flag in every neighborhood in the metro area, the country’s biggest bank by assets has taken a more targeted approach, he said, steadily expanding in the city.
JP Morgan Chase is up to 13 branches in Charlotte as of last November,and isn’t done yet.
“That to me is some indication that they’re not dying,” Stovall said.
This story was originally published February 28, 2022 at 6:00 AM.
