The rate of consolidation among bank branches has increased in the past two years as customers continue to embrace digital banking. Simultaneously, the number of new branch openings continues to fall. Analysts, however, view this as part of a larger shift in how retail branches are being utilized by customers and where those brick-and-mortar institutions need to be located.
Through the first nine months of this year, U.S. banks serving, among other business segments, the commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – have closed more than 2,600 branches. That is about 10 percent more than during the same time frame in each of the two previous years, according to statistics from the Federal Deposit Insurance Corp.
At the same time, U.S. banks involved with such assets as U.S. and Philadelphia commercial real estate properties have opened just 873 new branches this year. That number has steadily fallen each year from nearly 1,300 in the first nine months of 2013.
This CoStar report on the viability of physical bank facilities in relation to national and Philadelphia commercial properties is being offered through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.
Over the past five years, the net number of bank branches has decreased by nearly 7,900 locations, representing approximately 19.74 million square feet of closed bank space.
Leading the closures list so far this year are:
- JPMorgan Chase — 143 closures;
- Wells Fargo — 138;
- First-Citizens Bank & Trust — 135;
- KeyBank — 117;
- SunTrust — 117;
- PNC — 114;
- The Huntington National Bank — 109; and
- Bank of America — 98.
Most of them show up on the list of banks closing the most branches in the last five years, including:
- Bank of America — 810 closures;
- JPMorgan Chase — 712;
- PNC — 615;
- Wells Fargo — 526;
- SunTrust — 392;
- Capital One — 338;
- Branch Banking and Trust — 312; and
- Citibank — 309.
Even having closed more than 140 branches this year in the U.S. and Philadelphia commercial real estate markets, and more than 700 in the last five years, JPMorgan officers were asked this week during the firm’s earnings conference call why they weren’t doing more to trim their 5,200-branch network given that mobile banking was up another 12 percent year-over-year.
Marianne Lake, chief financial officer of JPMorgan Chase, was quick to answer: “Because branches still matter.”
The fact is, branches play a significant role for U.S. banks – they are a cheap source of capital.
“Seventy-five percent of our growth in deposits came from customers who have been using our branches,” Lake said. “On average, a customer comes into our branches multiple times in the quarter. I know that all sounds like old news, but it’s still new news or current news, so the branch distribution network matters.”
Still, there’s no doubt customer needs for a physical branch are changing, Lake added.
“We’re not being complacent to the consumer preference,” she said, “We’re building out all of the other sort of omni-channel pieces, as you know, so that we have the complete offering. If the customer behaviors start changing in a more accelerated fashion, we will respond accordingly.”
At Bank of America, customers dealing with national and Philadelphia commercial real estate listings – among other areas of business – and performing mobile banking transactions have increased 47 percent in the past 12 months. Mobile deposits now account of 21 percent of all check deposit transactions, according to Brian Moynihan, chairman and CEO of Bank of America.
“We processed nearly 14 million transactions, and the growth continues,” Moynihan said. “We recently processed a half of billion dollars in a single week.”
But, Moynihan added, the deposits of people that walk into a branch can be typically 10 times higher than the amounts people deposited digitally while dealing with various business segments such as the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space.
“Each day three-quarters of a million people come into our branches, and our teammates serve them well, and our scores at those branches are at all-time highs in terms of satisfaction, and 80 percent of the sales go on in that space,” he added.
That’s why he noted Bank of America would continue to invest in its physical branch network as it relates to U.S. and Philadelphia commercial real estate listings.
“We have been and we will continue to open centers and markets where you have a strong commercial banking wealth management client base,” he said.
For more information about Philly office space, Philly retail space and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.
Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.
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