Dive Brief:

• Banks across the country shuttered a record 2,927 branches in 2021, according to an S&P Global Market Intelligence report published Thursday.
• The net number of branch closures jumped 38% last year, from 2,126 in 2020 — itself a previous record.
• Wells Fargo, with 267, reported more net closures than any other bank in the U.S., followed by U.S. Bank at 257.

Dive Insight:

Banks are reducing their branch footprints as more customers choose to manage their accounts through mobile and other digital channels, instead of banking at traditional brick-and-mortar retail locations.

The S&P Global report indicates the COVID-19 pandemic has accelerated the shift toward digital banking, as low interest rates put additional strain on many banks. In response, banks are shuttering a record number of branches.

As banks downsized their branch networks in 2021, corporate dealmaking in the sector took off. U.S. banks made 208 deals in 2021, with a total estimated value of $77.58 billion, the highest value since 2006, S&P Global found.

Although Wells Fargo and U.S. Bank tallied a higher net number of branch closures than other institutions with at least 1,000 branches, Columbus, Ohio-based Huntington Bank reported the greatest percentage of brick-and-mortar shrinkage.

Huntington closed 221 branches in 2021, a 16% slimming of its retail locations — the most last year for a bank its size. The bank closed its acquisition of Detroit-based TCF in 2021. A month after announcing the deal, Huntington shut down 97 branches inside Meijer grocery stores throughout Michigan.

“As consolidation continues and there are overlapping branches when deals are approved, there’s no need to have two branches on Main Street,” Gerard Cassidy, RBC Capital Markets’ head of U.S. bank equity strategy, told CNBC. Cassidy said he expects branch closures to continue to increase in the coming years.

Bank of America CFO Alastair Borthwick last week fueled speculation that the U.S.'s second-largest bank could be planning branch closures in 2022. On the bank's fourth-quarter earnings call, Borthwick bemoaned “stubborn COVID costs,” referring to expenses tied to keeping branches open, and said those costs are expected to abate this year. 

The Charlotte, North Carolina-based lender opened the second-highest number of new branches in 2021, according to S&P Global. But on aggregate, the firm also reduced its branch network, shuttering 166 locations.

JPMorgan Chase opened the greatest number of new branches in 2021, with 169, S&P Global reported Thursday. However, when factoring in closures, the bank ultimately reduced its physical footprint by 129 branches last year.

Along with Wells Fargo, U.S. Bank and Huntington, Truist also reported more than 200 net branch closures in 2021. During a fourth-quarter earnings call last week, the bank's CEO, Bill Rogers, said he expected costs from the 2019 BB&T-SunTrust merger to peter out by the end of 2022 — potentially signaling a slowdown in branch closures.

After this year, "we will shift from an integration mindset to an operating mindset focused on executional excellence and growth, accelerate investments in our businesses, all underpinned by our unwavering purpose," he said.