More bank branch offices closed than opened last year, says an annual report from the research firm SNL Financial. It was the largest number of closures in any year since the firm began keeping track back in 2005.
More than 1,000 bank branch offices close
A total of 2,267 bank branches were shuttered in 2012, while 1,149 were opened, for an aggregate total of 1,118 bank branches closing nationwide.
More regulation and more customers going online
One reason for the trend is as a cost-cutting measure in the wake of stepped-up regulations from federal regulators.
“All the costs of regulation are pressing on banking as a whole, and with a low interest rate environment it’s harder and harder to make money,” said bank analyst and SNL Financial contributing editor, Nancy Bush. “They have to look for a way to offset that.”
The trend is also being driven by an increasing number of customers who prefer to do their banking on their computers or mobile devices. Fewer people are feeling the need to physically visit a bank branch office.
Some of the largest banks
Some of the nation’s largest banks — such as Bank of America, Capital One, Wells Fargo, PNC and Citibank — are contributing to the trend. Bank of America had the largest number of closures, at 256. It also opened 12 branches. Wells Fargo closed 80 branches and opened 19. PNC locked the doors on 82, but opened up 32 others.
Banks are pushing customers to do more banking online with incentives like lower checking account fees and expanded ATM features. However, some customers will always be resistant to conducting their banking business online.
While bank branches will always remain, the report says, they will become increasingly less common, and more concentrated in urban, high population-density areas.
“We will never have a branch-free banking industry, it’s just that they’re going to be more concentrated and less present in non-urban markets,” Bush said. “You’re just not going to have a branch on every corner anymore from here on out.”
Some areas buck trend
In some areas, however, banks are opening branches. One such area is Southern California’s Orange County, which is experiencing a period of high-growth. Last year, 63 bank branches were opened in Orange County and Los Angeles County, which are grouped together and considered a single market. Also in 2012, banks closed 50 banks in the market. That is a gain of 13 branches.