Bank Branches are Alive and Well

Button to Download the Current issue of Jumbo Rate News nowAccording to the FDIC, 461 banks have opened a total of 744 new branch offices during the first eight and a half months of 2019. While there are exceptions, the vast majority are full-service brick and mortar branches.

That’s good news for consumers. On average, total bank branches have declined over 1½% in each of the past six years. Some attrition is expected with mergers and acquisitions, overlapping branches tend to be sold off or closed. But it can be particularly difficult in rural areas when branches close.

Two Nebraska banks have found a way to continue servicing their customers and communities without incurring the costs of a full-service brick and mortar branch. They are:

 5-Star Citizens State Bank, Wisner, NE, which opened six mobile branches on August 12th—one each in Cedar, Colfax, Cuming, Greeley, Platte and Saline counties. These will be welcome partners for the brick and mortar branches already situated in these rural areas.

5-Star Five Points Bank, Grand Island, NE also took advantage of mobile branches, opening its first on Grand Island in 2006. It added one more in 2011 and two this year.

That’s eight new branches, albeit limited service, but eight new locations from just two small banks. Three hundred and fifty of the 461 opened one solitary branch, which one would expect to be the norm. But that leaves 111 that opened more than one new office. And, of those, half are community banks.

Another way to mitigate expense and still reach your customers: retail branches. That’s what 5-Star Gate City Bank, Fargo, ND and 5-Star FSNB, NA, Lawton, OK did. They opened full-service branches, but in retail stores. We imagine with their cold winters, there’s a lot of value to catching their customers while they are out they are already out shopping. It’s a win-win.

Back in 1994, when interstate banking became legal, there was a lot of concern that banks would establish (or acquire) out-of-state branches just to raise deposits. The fear was those deposits would leave their own community and be loaned out in the bank’s home state. This has been carefully monitored ever since.

Even so, today we are finding more and more banks opening loan production offices (LPOs). These LPOs are rarely in their home state.

 5-Star Gateway First Bank, Jenks, OK, for example, opened a new full-service branch in its home state but then ventured out of state to open four loan production offices—one each in Arizona, Louisiana, Tennessee and Washington.

5-Star Bank of England, AR, which currently operates through 151 offices has only six full-service brick and mortar branches. They are all located in Arkansas. The rest, including the three 2019 additions, are LPOs that span the country—from Alabama to Oregon.

And, 5-Star US Metro Bank, CA also opened two new loan production offices—one in New York and one in Georgia. These mark US Metro’s first venture outside of California, where its other five branches (all brick and mortar) reside.

5-Star Austin Capital Bank, TX only has one full-service brick and mortar office. If you couldn’t guess, it’s located in Austin. Its other ten branches are all LPOs. The three added this year are in Southlake, TX, Alpharetta, GA and Phoenixville, PA.

These are the exceptions. The vast majority of the newly established branches are full-service brick and mortar. Big Banks are also adding branches. 4-Star JPMorgan Chase has added 42 and 5-Star Bank of America 15 so far this year. Some open branches because they want to have the #1 market share, others are looking for the high wealth, high growth areas to add locations (i.e. follow the wealthy retirees).

These branch openings will not stem the tide. We will still see fewer overall branches next year. But they are proof positive that banks need more than technology. Customers still need that human touch. They may need it less frequently, but they need it to be convenient.

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