US Bank Branch Closures Increase by 38% in 2021

In 2021, US banks closed a record 2,927 branches, a 38% rise compared to 2020 which saw 2,126 branch closures, according to S&P Global Market Intelligence data.

The 2021 figure, which takes into account 1,000 branch openings alongside the near 4,000 branch closings, found that banks accelerated plans to consolidate branch footprints amid the Covid-19 pandemic which prompted consumer adoption of mobile and digital channels.

S&P Global noted that banks have also faced a tough operating environment with low interest rates pressuring margins and forcing a reconsideration of expenses.

Wells Fargo reported the most net closures last year with 267, followed by US Bancorp who reported 257 net closures.

On a relative basis, Huntington Bancshares had the most net closures among banks with at least 1,000 branches as the Ohio-based regional closed 221 net branches, shrinking its footprint by more than 16%.

Huntington pursued an aggressive branch consolidation as part of its merger with TCF Financial Corp and its pursuit of $490 million in expense synergies from the deal.

Among community banks, Olympia, Washington-based Heritage Bank reported a higher closure rate, shutting nearly 18% of its footprint in 2021.

Jeffrey Deuel, CEO, and president of the bank, said when closing a branch, the bank typically models some deposit attrition, typically 10% to 20% if the branch is close to another location and as much as 50% if it's a distant consolidation,

However, Deuel said the bank’s recent closures have not come close to fitting those models.

"The technology has made the customers a lot stickier than they used to be. And I think that's playing to our advantage," Deuel said, in a recent earnings call. "As we've watched how customers manage through the pandemic, it gave us a bit more confidence to take the actions we are."

Meanwhile, Red Bank, a New Jersey based bank was one of the top branch consolidators in 2021.

Management said during an investor conference that the company has consolidated 56 branches since 2017 and has plans to consolidate an additional 20 locations, leaving the bank with fewer than 40 branches.

Despite this, the bank has retained 92% of deposit balances from closed branches since 2017, said George Destafney, president for the bank’s central region.

Several banks also opened branches as lenders continued to use retail branches as a marketing and consumer acquisition tool reported S&P Global.

JP Morgan Chase & Co opened the most branches in 2021, with 169 new locations, significantly outpacing the 53 openings in 2020, while JP Morgan closed 129 branches on net.