By Saabira Chaudhuri and Emily Glazer
The number of U.S. bank branches has fallen to the lowest level
since 2005, as banks ramp up online services and work to cut costs,
federal data released Monday show.
The branch drop was the fifth in a row and the biggest one-year
decline recorded in at least two decades by the Federal Deposit
Insurance Corp.
The number of branches in the U.S. dropped to 94,725 as of June
30, down 1,614, or 1.7%, from a year earlier and down 4,825 from
the peak in 2009, according to the FDIC data.
Large and small banks have been cutting back on their branches
while spending more on mobile capabilities. Catering to changing
customer behavior, banks also save money when customers transact
business over their phones or laptops.
Among the largest banks, Bank of America Corp. saw the biggest
decline in branches, to 5,094 from 5,399, according to the FDIC
data.
Thong Nguyen, co-head of consumer banking for Bank of America,
recently said the bank wants "to follow where the customers really
want to go," noting that mobile-banking users have been growing by
about 20% over the past few years while traffic at branches is down
10% or more.
Bank of America's branch reduction has been the largest
contributor to the bank's roughly $4 billion in cost savings over
the past few years, according to analysts at RBC Capital
Markets.
Citigroup Inc., which is cutting Citibank branches outside major
metropolitan areas, saw total U.S. branches fall to 958 from 1,031.
Most recently, the bank agreed to sell 41 Texas branches to
BB&T Corp.
A representative for the bank said Citigroup in the past two
years has also opened 19 new branches and renovated 89 others.
Wells Fargo & Co. was the only one of the four biggest banks
to increase branches from last year. The number of Wells Fargo
branches rose by 17 to 6,310 as of June 30.
Bank branches fell in all but a handful of states, with Florida,
Illinois, Ohio and Pennsylvania among those showing the biggest
declines, according to the report. Slight gains were reported in
Hawaii, Massachusetts, Montana, Rhode Island and Wyoming,
Not every bank agrees that closing or selling branches is a good
idea.
"Anybody closing branches since the end of the recession when
the value of money has been zero is overlooking the need to value
the branches and the deposits they generate over a longer cycle,"
said U.S. Bancorp Chief Executive Richard Davis in a recent
interview.
Bank of America said that 85% of purchases of financial products
like checking accounts, loans, individual retirement accounts or
other types of financial investments are still conducted in
branches. In response, the lender has been investing in automated
teller machines with live tellers available through video chat at
about 100 branches. The bank has also said it would deploy
videoconferencing technology in about 500 branches.
J.P. Morgan Chase & Co., which saw branches fall slightly,
to 5,679 from 5,694, has ATMs at about 450 branches featuring a new
technology where customers can deposit bulk checks and get
withdrawals in different denominations, rather than relying on
tellers.
J.P. Morgan's new ATMs include the future capability to scan a
bar code so customers will be able to make credit-card payments
starting in early 2015 and mortgage and other payments later, said
Barry Sommers, chief executive of J.P. Morgan's consumer bank, in a
recent interview.
Wells Fargo, meanwhile, launched a minibranch store layout last
year in Washington, D.C. At three branches, the walls fold in at
night so only the ATMs are exposed to customers. The bank will
likely open more of these branches in dense markets like San
Francisco and New York, said Jonathan Velline, who leads store
strategy at the bank.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com and
Emily Glazer at emily.glazer@wsj.com
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