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Branch closures accelerate across all income segments YOY

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Branch closures accelerate across all income segments YOY

Banks and thrifts are closing branches all over the country and even the wealthiest areas are not immune. In the year ended June 30, 2017, U.S. banks and thrifts closed a net 677 branches in upper-income census tracts, compared to 370 net closures during the same period in 2016, an 83% increase year over year. By comparison, 2,238 branches were closed across all census tracts for the year ended June 30, 2017, up from 1,453 a year earlier.

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To conduct this analysis, S&P Global Market Intelligence examined bank and thrift branch activity at the census tract level based on Community Reinvestment Act, or CRA, income designations. These designations are based on tract classifications as defined by the Home Mortgage Disclosure Act and CRA regulations. A "low-income" census tract has a median family income that is less than 50% of the median family income for the broader area (the metropolitan area containing the tract or the entire non-metropolitan area of the state). A "moderate-income" census tract has a median family income between 50% and 80% of the broader area, a "middle-income" census tract falls between 80% and 120% and an "upper-income" census tract comes in at 120% or more of the median family income for the broader area.

To make the data comparable from 2012 to 2017, S&P Global Market Intelligence used the 2017 CRA income designation for every year. The analysis excludes branches in markets that do not have 2017 census tract income level designations. During the 12 months ended June 30, 2017, there were 20 net closures in tracts with no income designation.

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Bank of America Corp. closed a net 61 branches in low- and moderate-income areas in the year ended June 30, more than any other bank or thrift in the country. Since July 1, 2012, BofA has closed a net 293 branches in low- and moderate-income tracts, compared to 413 net closures in moderate- and upper-income areas. As of June 30, 2017, 71% of BofA's branches were in middle- and upper-income census tracts, up from 69% five years earlier.

Despite being some of the largest branch closers in low- and moderate-income CRA tracts, Citigroup Inc. and Regions Financial Corp. both had a higher total branch exposure to these same tracts due to even larger branch cuts in middle- and upper-income markets. Raleigh, N.C.-based First Citizens BancShares Inc. also saw an upward shift in exposure to low- and moderate-income census tracts to 27% as of June 30, 2017, compared to 25% five years ago. The company closed 80 branches in low- and moderate-income areas in the five-year period, representing only 30.5% of their total net closings.

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On the other hand, some companies are continuing to build out branch networks, even in lower-income areas. Killeen, Texas-based First Community Bancshares Inc. had 12 net openings in low-and moderate-income census tracts over the last five years and 25 total net openings across all income segments. As of June 30, 2017, 295 of First Community's 310 branches in CRA income census tracts were "in-store" branches. One of its subsidiaries, First National Bank Texas, relied on service charges on consumer accounts for 43.84% of its operating revenue in the first quarter, more than any other bank or thrift in the country.

Short Hills, N.J.-based Investors Bancorp Inc. added a net six branches in low- and moderate-income census tracts after June 30, 2012. By comparison, the company added a net 15 branches in middle- and upper-income areas, resulting in a decreased total branch exposure to lower-income tracts between 2012 and 2017.

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Click here for a template that allows a user to compare a company's current and historical branch distribution compared to peers based on census tract CRA income designation.

Click here to view a recorded video demo on best practices for bank branch analysis.

Click here to access a branch market share tool that allows you to generate market share reports for specific companies or U.S. markets.

S&P Global Market Intelligence combines bank branch data along with demographic information, which can be accessed via the market demographics page under the U.S. market analysis section of a company's briefing book page on the SNL website or in SNLxl.