The U.S. lost over 2,900 bank branches in 2021. While that represents less than 3.5% of the total, it is a new record. The previous record was set in 2020 as COVID began nudging consumers toward mobile banking. Clearly, that migration continued in 2021.
The four Big Banks with the most net branch closures were: Wells Fargo; Bank of America; Truist; and U.S. Bancorp. Combined, they closed almost 1,200. Truist, the result of the merger between SunTrust and BB&T, was expected. We knew they would be shuttering overlapping offices. Customers of Wells Fargo and BofA should take note, though.
Many customers select these banks simply because they can easily find a branch, wherever they travel. That may not be the case anymore as they closed 4.9% and 3.6% of their branch locations, respectively, last year.
While Big Banks shut unwanted branches, they leave openings for more community banks. And that’s good news for all of us. In fact, we have some really great news. Since the end of 2020, 643 banks have added more than 1,000 new locations combined. Of those, 389 (over 60%) are 5-Star rated community banks.
The majority opened just one new branch. But, those listed on pages 2 & 7 have opened 2 or more full-service offices since the end of 2020. (Those with more than 2 new branches can be found on page 2, while those with exactly 2 new locations can be found on page 7.)
5-Star Encore Bank, Little Rock, AR actually opened six new offices, more than doubling its presence in 2021 (one in Missouri (its first) two in Arkansas and three in Texas).
With its origins in Southeast Massachusetts and a footprint well into Rhode Island, 5-Star HarborOne Bank, Brockton, MA is now peppering Middlesex and Suffolk counties with new offices. It added five new branches in 2021, bringing its total number to 33.
5-Star BTC Bank, Bethany, MO added three offices, but they are not new. BTC purchased two small 5-Star banks in the fourth quarter of 2021. They were: 1st Cameron State Bank, Cameron, MO and Home Exchange Bank, Jamesport, MO.
That consolidation was the exception to these new branches, not the rule. What we see is community bankers banding together to serve the community better and save money in the process. For BTC, that resulted in an increase of $196 million in assets (to $907.6 at year-end) and an onboarding of 21 new employees (from 142 to 163 during the fourth quarter).
We do expect consolidation to continue as a cost-cutting tool, but the fact that so many community banks are opening new branches is a very good sign. It exhibits confidence in the future of banking as well as in the overall economy. As we’ve said before (JRN 38:27), the bank branch is alive and well... and so is community banking.