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Places That Lost the Most Bank Branches

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Not only are banks shuttering many of their branches across America, but they’re also declining to build more branches to accommodate population growth in others.

In a new study by MagnifyMoney, we found that there were 7% fewer bank branches in 2017 than there were a decade earlier in America’s 100 biggest metros.  At the same time, the population of those metros grew an average of 11%, so the number of branches per capita actually dropped an average of 16%.

For the analysis, we looked at a combination of data, including a record of active bank branches from the U.S. Federal Reserve and population data from the U.S. Census Bureau American Community Survey.

Even in some fast-growing places, we found banks are shuttering brick-and-mortar locations at a pretty good clip.  It’s a lot easier to not build new branches than it is to close existing ones, so it seems likely that failure to keep pace with a growing population fits nicely into a strategy of reducing branches for a growing customer base.

There are several reasons for this trend, but here are the big ones.

Merging banks means less need to compete through branch access

The word “synergy” is a popular one for the Mergers & Acquisitions crowd, and the banking world has been pretty gung-ho about mergers over the last few years. Indeed, the FDIC reports that the number of individual banking companies that conduct their business with branches dropped an astounding 25% between 2006 and 2016, thanks to 2,447 mergers among commercial banks and 349 among savings banks.  The newly consolidated banks don’t need branches that cover the same areas, and they may find that the reduced competition means they don’t need to fight for customers with more storefronts.

Branch access isn’t as important to banking customers as it used to be

A 2015 survey by the consulting firm Accenture reported that only 19% of customers say they would close their accounts if they lost their local branches, a significant drop from 2013, when 48% said they would close their accounts due to the inconvenience.

Friday afternoon teller lines to deposit paychecks and get the week’s cash have gone the way of rotary phones, but even the need for ATMs has been steadily declining thanks to easier card-over-cash use, online access and mobile banking apps that have improved exponentially over the last couple of years.  Users don’t even have to set foot in a bank to deposit the occasional physical check, thanks to smartphone scans, and friends can pay each other back with independent apps.

People are becoming more comfortable with accessing their money by digital means only, and they’re often getting better returns on, and cheaper access to, their money with savings account rates at online banks often much higher than those at traditional banks.

While many people find walking into a bank and talking to a professional behind a large desk a reassuring way to deal with the uncertainty and anxiety around buying financial products and services, more and more people prefer to gather as much information as they can across multiple banks, lenders and other businesses in the financial products space.

One exception to the trend

J.P. Morgan Chase & Co. recently announced that it will use part of its recent tax-cut windfall to build new branches, but at first glance, this appears to be a push into new markets, not a revitalization of existing ones.

Places that lost the most branches

1 – Lakeland, Fla.

Banks are shutting more branches in this in central Florida community than in any of the others we reviewed — a loss of 23% over 10 years.  Thanks to a healthy population increase of 19%, Lakeland-Winter Haven lost even more branches on a per capita basis: 35%.  That brings them down to 17 branches per 100,000 residents, which is considerably lower than the average 25 per 100,000 residents we found for the 100 cities we reviewed. Interestingly, Winter Haven is home to CenterState Bank, which has been on a buying spree to become the state’s biggest community bank. They closed 100 of their branches between 2009 and 2017 (just under half of what they had and acquired), which they say resulted in a per-branch deposit increase of 185%. They show no sign of slowing down this approach.

2 – Buffalo, N.Y.

Buffalo lost one out of five bank branches in the last decade.  This was marginally offset on per capita basis by the slight population loss (less than half a percent).  This may be in part because Buffalo’s hometown bank company, M&T, has closed branches as they gobble up banks in other communities, but they’re certainly not alone.  For example, KeyBank shut down several branches after purchasing local First Niagara.

3 – Baltimore

Some 19% of Baltimore’s bank branches closed their doors in the last ten years, although that still leaves them with slightly higher than average 27 branches per 100,000 people.  That’s especially surprising, given that the population increased by 8%, leading to a per capita loss of 25% (16% is the average for the 100 cities we examined).  Baltimore started the decade with almost 36 banks per 100,000, significantly higher than the 2007 average of 30.  While many banks closed branches, Santander shuttered every one of its Maryland branches in 2015, many of which they had thanks to the 2009 acquisition of Sovereign Bank.

4 – Stockton, Calif.

Stockton started with fewer bank branches on a per capita basis than most other big cities (18 versus an average of 30 for every 100,000 residents), but that didn’t stop them from closing their doors at a rate of 18% over the last ten years.  This combined with a population bump of 9% over the same period, to create a per capita loss of 28%.  If the city’s guaranteed basic income experiment works out, banks may take another look at the struggling community.

5 – Melbourne, Fla.

Palm Bay and Melbourne sit due east of Winter Haven, and while CenterState doesn’t appear to have a stake in this community, plenty of other community banks are consolidating in central Florida.  Melbourne has changed at a similar rate to Stockton: 18% fewer branches, 8% more people, leaving 24% fewer branches per capita, but that still leaves them with 20 branches per 100,000 people.

Places that saw an increase in branches

1 – El Paso, Texas

El Paso has 11% more branches now than it did 10 years ago, but that may be because they were so underserved to begin with.  To put this in perspective, the metro of 838,000 has 90 bank branches, which comes out to just under 11 branches per 100,000 people.  The average among the 100 biggest cities is 25 branches per 100,000 people, even after the drawdown.  The addition of nine new branches hasn’t kept up with the population increase of 14%, leading to an overall drop in branches per person of over 2%.  It looks like banks may continue to open branches, with a revitalization effort underway for Western Heritage Bank (in part, at least, through acquisition) and El Paso’s downtown.  Meanwhile, El Paso’s biggest credit union, GECU, is trying a strategy of more, but smaller, branches.

2 – Raleigh, N.C.

Like other many other southern cities, Research Triangle has seen a population explosion of 32% in the last decade. The addition of 24 branches (9%) doesn’t cover the distance, which means the number of branches per capita actually dropped by a substantial 17%.

3 – Oklahoma City

Oklahoma City is something of an anomaly, in that they added more branches to their already higher than average (per capita) number (33 per 100,000 residents in 2007).  That may be a function of the sheer land mass – the metropolitan statistical area comprised over 5,500 square miles.  They’ve added 18 branches over the last ten years, an increase of over 5%, but in a familiar story, that increase didn’t keep up with the 17% population increase.

Methodology:

Because the borders of Metropolitan Statistical Areas (“MSAs”) changed at the 2010 census, sometimes dramatically, we constructed the data to the current definition of MSAs using the crosswalk provided by the Bureau of Economic Analysis. We used the county-to-MSA crosswalk because that was the smallest geographic population designation reported by the U.S. Census for the 2006 American Community Survey.  In the event that a particular county was not reported for both time frames, that county was excluded from the analysis.

Loss of branches data were reported by the U.S. Federal Reserve and were matched at the constituted MSA level to 2016 (most recent available) and 2007 populations from the U.S. Census Bureau American Community Survey.  The results were limited to the 100 largest constituted MSAs, by population.

Statistics regarding the number of individual institutions was derived from “Statistics At A Glance,” as of Sept. 30, 2017 table and Table CB03 from the FDIC.

For the sake of clarity, we used the first city name and state name listed in the metropolitan statistical area designation, which we understand to be the most populated component (e.g., “St. Louis” for “St. Louis-St. Charles-Farmington, MO-IL”), except where a secondary city was deemed more familiar (e.g., “Fort Myers, Fla.” for “Cape Coral-Fort Myers, FL”).

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Kali McFadden
Kali McFadden |

Kali McFadden is a writer at MagnifyMoney. You can email Kali at [email protected]

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Survey: Americans Fear the Stock Market More Than They Love Retirement

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Gains and losses in the stock market can provoke a wide range of emotional responses, from jumping for joy to falling into a fetal position. But a recent MagnifyMoney survey found 60% of Americans feel anxiety when they think about investing in the market, and that reluctance to embrace investing may be costing them when it comes to retirement savings. Let’s take a look at why Americans dread the stock market and how they can face up to their fears.

Survey says people fear stock market crashes

The biggest reason Americans don’t like the stock market is because they are afraid they’ll lose their money in a market downturn or a crash. Our survey found that almost 61% of Americans hesitate to invest in the stock market because of a potential crash. Not every demographic feels that anxiety equally: Almost 72% of millennials worry about a crash, compared with only 56% of Gen Xers and 55% of baby boomers, despite the fact that the younger millennials have more time to absorb and make up for losses in the market.

Beyond age, gender also plays a role in shaping a person’s investing strategies. Our survey found that 59% of men were willing to accept the risk of losing money in the market if it gave them the possibility of a big windfall, while 58% of women didn’t think the loss of any money was worth investing in the market. Women also worry more about making a mistake with their investment decisions — 63% of women versus 53% of men — and are less likely to have an investment account — 44% of women have accounts versus 60% of men.

According to our survey at MagnifyMoney, more than half of the respondents have an investment account, and most of them (67%) have one thanks to their employer.

Why you need to invest in the stock market

Movies such as The Wolf of Wall Street and The Big Short may give the impression that the stock market is the exclusive playground of the privileged looking to turn their millions into billions. But the modern retirement savings landscape — specifically the shift from companies offering pension plans with guaranteed lifelong income, to employer matches on private investment accounts — makes investing in the stock market a necessity for anyone hoping to retire one day.

“Unless you are a Kardashian or the founder of a tech startup, very few people will be able to save enough money to have a secure financial future without at least some exposure to investments,” said David Rae, a CFP based in Los Angeles.

It’s not a coincidence that Americans who don’t invest in the stock market also lag woefully behind on their retirement savings. Less than half of the country’s women have an investment account, and only 36% of them report feeling on-track with their retirement savings, according to a 2018 study by Prudential. And that sense of falling behind isn’t just a feeling — a separate survey from Student Loan Hero, which like MagnifyMoney, is also owned by LendingTree, found women have saved on average only half as much as men.

Millennials who shun the stock market risk seeing their retirement dreams slip away. A report from the nonprofit National Institute on Retirement Security found that millennials as a whole have “earned about 20% less in wages, are less likely to own a home, and have accumulated about half of the wealth of their parents at the same stage in their lives.” A separate study from MagnifyMoney shows just how far this generation has to go, reporting a median savings of $23,000, instead of the $112,000 many financial experts would recommend.

In short, unless you have a trust fund or a billion-dollar idea, you can’t really afford to ignore the benefits of compound interest granted by investing and just store all of their money away in a deposit account, where inflation will almost certainly eat away most of its purchasing power over time.

How to get over the fear of investing

The thought of investing may cause a sinking feeling in most people’s stomachs, but the following advice should calm your nerves when it comes to putting money to work in the stock market.

Don’t panic when the market does

If your worst fears about the stock market are realized in the form of a recession or crash, one surefire way to make things worse is to dump all your stocks and leave the market. “Sticking to your portfolio, whether times are good or bad, is usually the right choice,” said Rae. “Buying and selling without a plan is a recipe for crappy investment returns.” Fortunately, the MagnifyMoney survey found that almost half (49%) of respondents plan to do nothing if a recession hits.

While it’s good so many people aren’t planning to ghost during a bear market, you could also start thinking of a recession as a chance to snag stocks on the cheap. “A recession is like a big sale on stocks that only comes along every few years,” said Rae. “Look to increase your contributions to your investment accounts, if you can.”

Act your age with your investments

Not only are the young blessed with wrinkle-free skin and all of their hair, but they also have the ability to maximize the return on their investments thanks to the magic of compound interest. Because time is on their side, they can afford to allocate more of their savings in stocks — where risks and rewards are both greater — than in lower-risk, lower-return bond markets, money market accounts, savings accounts or other deposit accounts.

As you get older and wiser, and closer to the big retirement date, you should rethink the makeup of your portfolio, shifting more investments to safer asset classes and away from riskier stocks. This way if the market suffers a downturn, you’re be less exposed to the damage and better able to weather the storm until good times are here again.

Don’t be afraid to ask for help

You may think you need to be rich before you need to hire a financial advisor, but there’s nothing further from the truth. Advisors aren’t free, and even the low-fee ones will charge a commission that ultimately comes from your savings, but the peace of mind and clarity you gain about your investments can be worth the money. One rule of thumb you might consider is to use a robo-advisor if you have less than $100,000 in investable assets, and pony up for a real live human advisor once your investments break six figures.

The time to invest in the market is now

Most Americans don’t like the stock market, but investing is almost a requirement if you want to retire. Fortunately, investing doesn’t have to be so scary and by taking some time to learn the basics, you’ll be well on your way toward celebrating your golden years in financial security.

Methodology

MagnifyMoney by LendingTree commissioned Qualtrics to conduct an online survey of 1,049 Americans, with the sample base proportioned to represent the general population. The survey was fielded May 13-15, 2019. Generations are defined as follows:

  • Millennials are ages 22-37
  • Generation Xers are ages 38-53
  • Baby Boomers are ages 54-72

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

James Ellis
James Ellis |

James Ellis is a writer at MagnifyMoney. You can email James here

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