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Updated on Wednesday, December 18, 2019
Bank branches have been closing at a staggering rate over recent years. According to data from the Federal Deposit Insurance Corp. (FDIC), the top 100 U.S. metros by population have lost nearly 1,300 branches since 2018 alone. MagnifyMoney took a deep dive into the FDIC data to see which cities have been hardest hit by bank branch losses.
Our study revealed that the big metros like New York City and Chicago lost the greatest number of branches, but smaller metros were hit the hardest when you look at the losses as a percentage of total bank branches in each area. Our study uncovered a few outliers, and also identified several metro areas that actually gained bank branches since 2018.
- Among the 100 largest U.S. metro areas, 79 have fewer branches in 2019 than they did in 2018. The number of branches increased in 15 metro areas, and remained unchanged in six metros.
- Branch losses took a big bite out of the Big Apple. New York lost the most bank branches in 2019, with 379 fewer branches than a year ago. Chicago trails New York with 74 branches lost, followed by Washington D.C. with 57 branches shuttered.
- When considering the percentage of each metro area’s bank locations that closed in 2019, Spokane, Wash. saw the biggest loss, with 8.3% of its bank branches shuttered. Melbourne, Fla. comes next with 8% fewer branches in 2019, followed by Boise, Idaho with 7.4% fewer bank branches.
- Metros that bucked the trend were Toledo, Ohio; Springfield, Mass.; and Des Moines, Iowa. In 2019, these three metro areas gained 24, 17 and 11 bank branches, respectively. They are also the three metros with the largest percentage increase in total bank locations.
- Jackson, Miss. currently has the most bank branches on a per household basis, with 106 branches for every 100,000 households. El Paso, Texas has the fewest on a per household basis, with only 32 branches per every 100,000 households. That’s less than a third of the number of branches in Jackson.
Cities that lost the most bank branches
New York City saw the steepest decline in branches, losing a whopping 379 bank locations in the past year. It’s worth noting, though, that the New York City figure is a modest 6.9% of its overall number of bank branches, underscoring the massive fleet of locations that are still open in the city.
When it comes to losing bank branches, Chicago comes in second place, with a loss of 74 bank branches in the past year. Like New York, though, that makes up just a small slice (2.7%) of the city’s total count of bank branches. Third was Washington D.C., which shed 57 branches or 3.7% of bank branches in the city in 2019.
Cities that lost the biggest percentage of bank branches
The data paints a different picture when you look at the percentage of total bank branches major metro areas lost in 2019. When a city doesn’t have tons of bank branches to begin with, losing a small number can make a big difference.
This was certainly the case for the top-100 U.S. metro that lost the biggest percentage of bank branches in 2019: Spokane, Wash. Our study found that Spokane lost 10 branches, an 8.3% decline. Melbourne, Fla. took second place, with nine branches closed, or 8% of the city’s total branches. In third place was Boise, Idaho., which said goodbye to 13 branches, or 7.4% of the city’s total.
Our study’s findings underscore that while bigger cities might lose the most branches, smaller cities may feel a deeper impact from these losses. Take the top cities with the smallest number of bank branches per 100,000 households. El Paso, Texas ranked last by this measure, with just 32.6 bank branches per 100,000 households, followed by Bakersfield, Calif. with 33 branches per 100,000 households.
Cities that gained bank branches
Surprisingly, not all cities saw a decline in bank branches, and a handful actually gained bank locations. Those that bucked the trend were typically smaller metros, concentrated in the Midwest.
The city that gained the most bank branches in 2019 was Toledo, Ohio, with 24 branches added. Springfield, Mass. comes second with an increase of 17 branches, followed by Des Moines, Iowa with an added 11 branches.
Interestingly, a 2018 report from the Wall Street Journal highlighted a similar trend, noting that while big banks are shrinking their physical footprint, smaller banks are ramping up their brick-and-mortar presence in an effort to drive growth and to show commitment to their local communities.
When looking at the number of branches per 100,000 households, there are a few cities that also seem to be brimming with banks. Jackson, Miss., for example, has an impressive 106.5 bank branches per 100,000 households, followed by Bridgeport, Conn., with 101.7 branches per 100,000 households.
Why bank branches are closing
The FDIC has extensively documented the trend of bank branches closing across the nation over the past decade. Banking is nowhere near obsolete, though, so what’s causing the sudden shuttering of so many bank branches?
A big contributing factor could be the rise of fintech competitors. In recent years, there’s been a flood of companies leveraging technology, allowing their customers to get their banking done from anywhere, obviating the need to visit a branch.
Not only are these companies providing customers with more convenience than brick-and-mortars, but many are becoming an increasingly attractive alternative to traditional banking because of features like higher APYs and no fees. Since fintech companies are able to save on the overhead costs that come with operating brick-and-mortar locations, they’re able to offer perks that other banks simply can’t afford.
Additionally, big banks that have large brick-and-mortar networks are beginning to shift their focus to their digital offerings, and some have cited that as to why they’re cutting back on the number of physical branches.
Another reason for the closing of bank branches could be attributed to the uptick in bank mergers, which often leads to the consolidation and closing of branches. In 2015, banking industry M&A activity reached a 17-year high, and FDIC data has found that from 2012 to 2017, merging banks reported 2.8% fewer offices than the 1.4% rate of non-merging banks.
What to do if your bank branch closes
If your local bank branch announces that it’s closing up shop, don’t panic. Instead, consider the next closest location and the bank’s ATM availability, and decide whether you’re willing to travel a bit farther to get your banking business done.
Don’t forget to explore what digital services your bank offers, too. Many alternatives have features that allow you to make deposits and transfers right from your phone, making the case for not needing a physical branch right near you that much stronger.
If you do decide to close your account and move to a bank that has a physical branch near you, be sure to follow the necessary steps. Actions to take before you part ways with your current bank include carefully selecting a new account, transferring your money to your new account – although it’s recommended to leave a little bit to cover any pending transactions that have yet to process – and rerouting your automatic bill payments and direct deposits.
MagnifyMoney examined data gathered by the FDIC from it’s roughly 6,000 insured commercial banks and other financial institutions to determine where bank branches are currently operating, and how that has changed since 2018.