Dive Brief:

• More than 4,400 bank branches closed in the U.S. between 2017 and 2020 — a 5.1% drop from 85,993 to 81,586 — according to a report posted Monday by the National Community Reinvestment Coalition (NCRC).
• The overall pace of branch closures has accelerated since 2008. Previous NCRC research showed 7,779 fewer branches in 2017 than there were in 2008, for an average of 864 branches lost per year. By comparison, the 4,407 branches lost between 2017 and 2020 represents an average decrease per year of 1,469 branches. The NCRC research showed a spike of 1,771 branches lost between 2016 and 2017.
• Supplemental data from the Federal Deposit Insurance Corp. (FDIC) suggests the coronavirus pandemic slowed — at least for a time — the pace of branch closures. The FDIC indicated 116 branches closed during this year’s third quarter, including 34 branches added in July — a sharp turnaround compared with the 383 lost in the third quarter of 2019. However, the agency also indicated 165 branches closed in October 2020, more than doubling the 76 branches lost in last year’s fourth quarter.

Dive Insight:

The crux of the NCRC study shows the disproportionate loss of branches in low- to moderate-income (LMI) areas, and those with higher populations of nonwhites.

About 1,020 of the 4,407 branches lost nationwide since 2017 closed in LMI neighborhoods. But numbers spiked locally. Alaska saw an almost 18% closure rate among branches in medium- to high-minority (MHM) communities. Idaho and Hawaii experienced a branch loss rate of up to 16% in LMI neighborhoods. And parts of Louisiana lost up to 23.6% of their branches in low-income, high-minority neighborhoods, the NCRC study showed.

Among cities, Chicago saw an overall branch closure rate of 8.5%, but that figure rose to one-third in LMI and MHM areas. Jacksonville, Fort Myers and Port St. Lucie, Florida, lost as many as 13.3% of their branches, with some LMI areas reporting a 50% drop. Likewise, Hartford, Connecticut, lost 12.3% of its branches, but nearly half of the branch closings came in MHM areas, the NCRC found.

The study also indicated many rural counties saw small increases in the number of branches between 2017 and 2020, showing at least a glimmer of a turnaround from research the Federal Reserve published last year identifying 44 counties — 39 of them rural — that had lost at least half of their 10 or fewer branches between 2012 and 2017.

The NCRC also broke down branch closures by bank, finding Capital One had closed nearly 32% of its brick-and-mortar presence since 2017. Other large banks with branch closure rates above 10% are Truist (16.5%), Huntington (16.2%), Santander (13.3%), U.S. Bank (11.9%), KeyBank (10.6%) and Wells Fargo (10.1%). PNC, which has long touted an "aggressive" branch consolidation strategy, lost 9.4% of its branches.

Truist’s elevated figure is to be expected as the year-old brand sorts out its physical footprint from the combined presence of SunTrust and BB&T, the two entities that merged to form it.

Huntington, coming off its Sunday night announcement of an intention to merge with TCF, can also expect to continue closing locations.

U.S. Bank’s figures are in line with the Minneapolis-based lender’s strategy to close 10% to 15% of its branches by early 2021. However, CEO Andy Cecere said in October he intends to close an additional 15%, although the vast majority of those would be locations temporarily shuttered during the pandemic.

KeyBank CEO Chris Gorman said in September the coronavirus has accelerated the bank’s digital strategy by five years.

Indeed, between March and May, more than 45% of Americans had changed the primary mode by which they did business with their bank, consultancy FIS found in a survey of 1,000 people. Wells Fargo has seen a 35% increase in the number of checks deposited digitally, Mary Mack, the bank’s CEO of consumer and small-business banking, told the Financial Times.

The long-term effect of the coronavirus on branch footprint remains to be seen. The Office of the Comptroller of the Currency (OCC) in July warned banks not to use the crisis as an excuse to close branches. Acting Comptroller Brian Brooks said existing rules governing branch closures would remain in place, and banks should not expect to see a permanent extension of certain rule relaxations related to COVID-19.

Still, no trend is yet visible as to whether the post-COVID branch strategy is more of the July 2020 lull or the hyperactive October.

"With many branches closed or offering reduced services, local permitting offices operating at reduced capacity and commercial rents in freefall, banks might be reassessing their branch footprints or waiting until the economic outlook is clearer before making commitments related to branch changes," the NCRC wrote Monday.