Vanishing bank branches have become a reality for most U.S. metro areas. According to a study by DepositAccounts.com, another LendingTree partner, from 2008 to 2018 all but seven of the 100 largest U.S. metro areas lost bank branches. When reviewed on a branches-per-capita basis, every single metro experienced bank branch loss. The trend of banks trimming their branch networks is unsurprising given that 71% of bank customers regularly do their banking online and 43% use banking services on mobile devices.
Credit unions appear to be filling some of the branch coverage gaps left by banks. In this study, our analysts compared the number of credit union branches operating in June 2019 to the number of branches operating five years earlier, and we found that credit unions had expanded in 50 of the 100 largest U.S. metro areas.
Not all major metro areas are seeing growth in credit union branches, however. A total of 45 metro areas saw contracting numbers of credit union branches over the 2014-2019 period, with Ohio and Pennsylvania hit especially hard by losses.
- Credit unions increased their footprints in exactly half of the 100 largest U.S. metro areas we analyzed. There were no changes in another five metros, and the number of branches decreased in 45 metro areas.
- Accounting for population growth, credit unions increased their footprints on a per capita basis in 32 metro areas.
- The number of credit union branches in Fort Myers, Fla., jumped an astounding 59% between 2014 and 2019, and grew 39% on a per capita basis.
- Daytona Beach, Fla., and Charleston, S.C., saw the second and third largest branch growth rates, respectively, at 28% each. That represents growth in branches per capita of 17% and 16%, respectively.
- Augusta, Ga., saw nearly one in four of their credit union branches shuttered in the last five years, which represented a 27% loss in branches per 100,000 residents.
- Scranton, Pa., and McAllen, Texas, lost 20% of their branches over the last five years, a 19% and 24% loss in branches per capita, respectively.
- America’s largest cities are losing credit union branches: The nine largest metros all lost branches.
Where credit unions are opening branches
Residents of sunny Florida may find they have plenty of credit union options available to them. Four metro areas in Florida found spots on the top ten list of where credit unions are expanding their branch networks.
Fort Meyers and Daytona Beach, Fla., held the number one and two spots, respectively. The number of credit union branches in Fort Myers grew a whopping 59% between 2014 and 2019. Daytona Beach saw a high rate of growth during that time period too, a 28% gain. Sand, surf and credit unions. What’s not to love?
Credit unions seem to be a growing trend in the south. Tennessee and South Carolina metro areas also made the top 10, meaning 60% of the top ten metro areas for credit union growth were in the south.
Where credit unions are closing branches
The trend of growing credit unions doesn’t touch every area of the country. In fact, quite the opposite is occurring in locations like Augusta, Ga., which lost around 25% of their credit union branches in the last five years.
Scranton, Pa., and McAllen, Texas, also experienced 20% contractions in the number of credit union branches. Pennsylvania and Ohio have been hit harder than other states by branch loss in recent years — as have some of America’s largest cities, including New York City and Los Angeles. The nine largest metro areas in the United States have lost credit union branches in the past five years.
Why credit unions acquire banks
In the past, most credit unions expanded by acquiring other credit unions. But in recent years, it has become increasingly common for credit unions to buy community banks. Acquiring banks helps credit unions expand, but purchasing small banks may be the key to their success.
Similar to credit unions, small community banks often have more personal relationships with their customers than large banks. These shared values would, in theory, help acquisitions between credit unions and small banks go more smoothly.
Credit unions vs. banks
For some communities that have lost access to bank branches, credit unions have swept in to fill the void. Daytona Beach and Melbourne, Fla., were two metro areas that found a spot in the top ten metro areas that lost bank branches from 2008 to 2018. In 2019, both of those locations fall within the top ten locations where credit unions are building branches.
Bank mergers are notorious for leaving communities underbanked. Large banks generally have higher fees and higher minimum required balances for deposit accounts compared to small banks. When there is a bank consolidation, it often becomes more expensive for low-income households to maintain bank accounts.
There is an existing pattern of deposit account fees and minimum required balances increasing after the acquisition of small banks by large banks. This occurs less when other small banks are the ones acquiring banks.
In 2017, the Federal Deposit Insurance Corporation (FDIC) found that 6.5% of households in the United States were unbanked, affecting approximately 8.4 million households. An additional 18.7% (24.2 million) of U.S. households were underbanked. The term underbanked refers to households that have a checking or savings account but have also obtained financial products and services outside of the banking system.
Credit unions have also been merging, but they may not be closing branches in the way that merging banks do. This may be because credit unions are purchasing other credit unions that have geographic radii away from the acquirer’s base. The National Credit Union Association approved 192 consolidations in 2018. Mergers were approved for a variety of reasons such as declining membership.
The benefits of banking with a credit union
For many, banking with a large bank chain might not be the best or preferred option. This is not just for financial reasons, but also for more personal ones. The FDIC’s 2017 National Survey of Unbanked and Underbanked Households found that some of the main reasons people don’t have bank accounts include:
- Don’t have enough money to keep in an account: 52.7%
- Don’t trust banks: 30.2%
- Avoiding banks provides more privacy: 28.2%
- Account fees are too high: 24.7%
- Account fees are unpredictable: 20.2%
Other reasons respondents offered in the report include problems in the past with bank accounts, problems working with banks that don’t offer needed products or services and inconvenient bank hours and locations.
Credit unions may be a more desirable banking option for many people, as they often address some of these top complaints. Credit unions generally offer higher interest rates on their deposit accounts and more affordable loan products. The Credit Union National Association (CUNA) found that on average, households save $214 per year when banking with a credit union.
Other benefits of banking with a credit union may include a stronger sense of commitment to the community and a willingness to work with those who have poor credit histories. These benefits may be helping credit unions grow as banks continue to struggle.
Analysts mapped branch addresses reported by state and federally chartered credit unions in their June 2019 call reports to the National Credit Union Administration to the addresses reported in June 2014 call reports and then compared the changes in the total number of credit union branches in the 100 largest metropolitan areas in the United States.
Branches per capita was calculated as the number of credit union branches per 100,000 residents in each period. Population data for the 2019 calculation was the July 2018 (the last available) U.S. Census Bureau’s American Community Survey, and July 2013 for the 2014 calculation.