Wells Fargo (NYSE: WFC), JP Morgan Chase (NYSE: JPM), and Bank of America (NYSE: BAC) Increase Bank Branches While Branch Counts Fall Across Country
The number of bank branches are on the decline in the U.S., a sign that the financial crisis of 2008 has caused a shift for the financial institutions. Though the number of branches in down in total, big banks buck that trend and have shown increases. Massive consolidation in the industry over the past four years which wiped out many of the mid major banks like Wachovia and Washington Mutual, coupled with many small banks going out of business have effectively skewed the magnitude of bank branches to be part of big branch networks like Bank of America (NYSE: BAC), Citigroup (NYSE: C), Wells Fargo (NYSE: WFC), and JPMorgan Chase (NYSE: JPM).
According to a report from SNL Financial, the top 20 banks by branches boasted 40,663 branches at June 30, up 2 percent from the group’s total of 39,968 branches three years earlier. The five largest, with branch totals, are: Wells Fargo & Co. , 6,307; Bank of America, 5,612; JP Morgan Chase, 5,594; and US Bancorp, 3,130; and PNC Financial Services Group Inc., 3,036 branches.
Regional consolidations in the banking sector have also driven bank closures, as many banks have sought to consolidate operations in cases where multiple branches they owned were in close proximity to each other. Following the Washington Mutual acquisition by JPMorgan Chase, the firm found that in many cases, the banks now owned two branches on the same street – rather than keeping all open there have been consolidations that cut costs, and minimally impacted the customer experience.
PNC Financial Services Group’s purchase of RBC Bank and BB&T Corp.’s acquisition of Colonial Bank produced similar results. The Wachovia acquisition by Wells Fargo was slightly less impacted, as the Wachovia brand was primarily based on the east coast, where Wells Fargo had a smaller presence. So, Wells Fargo has rebranded many of the former Wachovia branches, in an effort to increase their market presence.
As more customers seek to do their banking online, the decrease in the number of physical bank branches may be the beginning of a new trend. Many markets are already fully saturated with multiple bank branches from a variety of providers on each city block, so expanding the number of branches, which often operate at operational losses, may be curbed in favor of expanding online presence. Smaller banks may find it harder to compete in the new regulated market place – big banks, while also seeing profits stifled due to rising regulatory costs, have the competitive advantage of scale they may choose to leverage.