U.S. Banks Closing and Consolidating Branches, But Still Growing Deposits

Tuesday, October 31, 2017

Remi Lukosiunas

As you drive down the street, you often see different banks on each side of the road — and sometimes right next to each other. You go a few miles further down the road and once again, buildings with the same names pop up.

But the data shows that, in fact, more and more bank branches are disappearing. The banks themselves aren’t going anywhere … but the numbers of branch locations they operate have been decreasing over time and continue to do so.

In the past five years, the total number of U.S. bank branches has dropped 8.2%. There were 88,863 as of June 30, down from 96,850 in 2012.

Don’t get me wrong, it’s still very convenient and easy to access a bank branch today. But compared to the prior years, there are a lot less of them now.

With technology and mobile applications taking over our lives, the brick-and-mortar branches are becoming less popular, especially with the younger generation. Mobile check deposits, email money transfers, and tons of other services are now right at your fingertips, eliminating the need to wait in line — or even to get out of your office chair!

Of course, some financial matters like accessing your safety deposit box will require you to go see someone at the branch. But most day-to-day financial needs can be met using a computer, a tablet, or a cell phone.

Although numbers are down, some states still have a large physical bank presence. California, Texas, and Florida are the top three states with the most bank branches: 6,840, 6,487, and 5,111 branches, respectively. Still, all top ten states have seen a decline over the last five years, as you can see in this table.

Top 10 States with Most Bank Branches

You might think that with fewer physical branches, banks would see a decrease in deposits. But it’s quite the opposite.

In Q2 2017, the banking industry reported $11.6 trillion in domestic deposits. This is up 34.6% over a nearly five-year period, and 1.6% higher than the year-end 2016 figure.

Some of the largest banks grew their deposits by double digits over the last five years, while simultaneously reducing the number of branches they operate.

Top 5 Largest Domestic Deposit Holders

Bank of America, NA (Rated “B-”), the largest domestic deposit holder, had $1.3 trillion in deposits as of Q2. That was up 21.5% since 2012, despite a branch count drop of 13.1%. Among the top five deposit banks, JPMorgan Chase Bank, NA (Rated “B”) grew its deposits the most, 40.4%, over nearly a five-year period and reduced its branches by 7%. U.S. Bank, NA (Rated “B-”) was the only one of the five with a slight increase in branch numbers since 2012.

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The bottom line is that banks have grown their deposits tremendously while consolidating, or entirely eliminating, some of their physical properties. This way, they can reduce the cost of operating branches and make technological investments instead.

A mobile phone application that is easy to use and always works will result in countless happy customers who will be thankful for not standing in line to deposit a check or to make a transfer. Online banking has taken over and will continue to expand, but it’s unlikely that it will make brick-and-mortar locations completely go away.

Regardless of who your bank is, or how you prefer to handle your transactions, be sure to follow the safety of your institution on the Weiss Ratings website.

Think Safety,

Remi Lukosiunas


Remi Lukosiunas

Money and Banking Edition, By Remi Lukosiunas, Financial Analyst

Remi Lukosiunas, a Financial Analyst, joined Weiss Ratings in 2014 with a financial services background in internal audit and the credit union industry. Remi conducts banking, credit union, insurance and investment research. He has also written extensively on stocks and investing using ratings as a guide. Remi is a graduate of Florida State University with a degree in multinational business.

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