Banking, finance, and taxes

Banks and States With the Most Branch Closings: The Rise of Mobile Banking

It is no secret that the banking industry is seeing major changes in how the companies operate. After years of retail presence expansion, that trend has been unwinding as banks see how ever more mobile banking usage by consumers is allowing them to chop down on the number of bank branches they operate. If banks are not closing the number of locations, they almost certainly are dropping the number of ways into the banks and the services inside those banks — that means fewer drive-through locations and far fewer bank tellers.

A report from SNL Financial at the end of April showed that a net 332 bank branches were closed during the first quarter alone. The reason? Mobile banking. SNL Financial showed that there was a net loss of some 1,441 in net banking branches in the trailing 12 months. From April 1, 2014, through March 31, 2015, the number of bank and thrift openings was 1,023 branches — but some 2,464 branches were closed during the same period (totals exclude credit unions).

After having seen Bank of America Corp. (NYSE: BAC) drop many of its tellers and full-service drive-through operations in Houston, many banks are making the same adjustments: shrinking the number of their retail locations or their services personnel. Bank of America has been the top dog when it comes to total branch closures over the past year, but ranked as number 10 in quarterly closures, with 13 net closures in first quarter. The bank still had some 4,886 branches, but that was down 151 on a net basis from a year earlier.

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PNC Financial Services Group Inc. (NYSE: PNC) was the bank closing the most branches in the first quarter, with 38 net closings. PNC had 55 net branch closures in the trailing 12 months. The company showed with its most recent earnings that about 50% of consumers used nonteller channels for the majority of their transactions during the first quarter of 2015, which compares to 49% in the previous quarter and 43% a year ago. PNC’s noninterest expenses decreased quarter over quarter, in part due to lower branch occupancy costs as it converted 127 branches to smaller and more automated formats.

Regions Financial Corp. (NYSE: RF) was second in the number of branch closures, down 32 net branches to end the first quarter with 1,637. That puts the net store locations down 43 from the prior year.

JPMorgan Chase & Co. (NYSE: JPM) was third in the line of quarterly closures, as it shut down 31 branches on a net basis in the first quarter of 2015. It had 5,616 retail locations at the end of the first quarter, down 65 net branches from a year ago. Jamie Dimon and his team have said that they plan to close 300 branches by the end of 2016. The bank said during the first quarter that expenses in the company’s consumer and business banking segment fell by 3% from a year earlier, due to branch efficiency improvements. Hint: Do you think that means and will mean fewer tellers ahead?

BOK Financial Corp. (NASDAQ: BOKF) was shown to have closed 28 net branches in the first quarter of 2015, which SNL showed as being part of its plan to discontinue in-store branching strategy. The late-2014 indication from BOK Financial was that the consumer trends are leaning more toward use of digital banking for everyday transactions.

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SNL Financial showed that Michigan lost the most of all states, or 28 fewer net branches in the first quarter. Some 19 of those closures were JPMorgan branches, 17 of which were located in the Detroit metro area. Of those 17 branches, 16 were located inside a Meijer store. SNL showed that 25 branches were closed in the Detroit metro area in the first quarter, including four Guaranty Financial (MHC) branches, two PNC branches, one Bank of America branch and one Huntington Bancshares branch.

The 10 states losing the most branches in the first quarter of 2015 alone were as follows:

  • Michigan (-28)
  • California (-26)
  • Washington (-25)
  • Oklahoma (-25)
  • Illinois (-24)
  • Georgia (-23)
  • Pennsylvania (-16)
  • North Carolina (-15)
  • Wisconsin (-12)
  • Kentucky (-12)

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Only seven states saw net branches added after tallying up the number of openings and closures. Sadly, those net openings were microscopic. Arkansas led the states with a whopping three branch openings. Other details were as follows:

  • States with a net one branch opening in the first quarter were Alaska, Delaware, Maine, New Hampshire, North Dakota and West Virginia.
  • Only three states were flat with the number of net branches in the first quarter: Mississippi, Virginia and Wyoming.

So, what about what this means for bank tellers? Let’s just say that this soon will be one of the biggest dead-end jobs in America — if it isn’t already. Being a bank teller used to be the most common entry level way to get into banking. Now the darker reality is that the job title bank teller may simply not exist much longer. If banks are not closing their branches, they are decreasing the full-service activities.

24/7 Wall St. wanted to see what this means for the economy, and it is not good. The Bureau of Labor Statistics (BLS), in its occupational outlook handbook, showed that the number of tellers in 2012 was some 545,300, with a median pay of $24,940 per year (or $11.99 per hour).

The BLS further said that tellers are responsible for accurately processing routine transactions at a bank. These transactions include cashing checks, depositing money and collecting loan payments. About one in three worked part time in 2012. All of those functions are being replaced by technology. Have you tried to go deposit a bank check lately?

We have yet to see any consumers wearing tee-shirts that say “Have you hugged your banker today?” That being said, there will be fewer and fewer net branch locations where consumers can find those shirts in the future.

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