Wave of Branch Closures Slows as Banks Adjust Staffing

The wave of bank branch closures during the pandemic, which shuttered 2,700 bank outlets in 2021 as consumer preference shifted to digital banking, dropped off in Q2 2022, according to a new report from S&P Global.

According to S&P data compiled as of June 13, only 248 bank branch closures were reported in the second quarter, down from 809 in Q1 2022 and the lowest quarterly total since Q3 2020.

Like many other sectors of the US economy, the banking industry is rethinking its staffing needs amid a nationwide labor shortage that has available workers demanding higher wages.

Many banks are opting to modernize their branches to more technology-focused models in order to operate with less staff and adapt to changing consumer preferences while closing fewer branches, the S&P report said.

Banks are paying higher wages for fewer workers and shifting their personnel models to focus on consulting rather than transactions, the report said.

Bank branch closures peaked at 1,182 in Q4 2020, with closures totaling nearly 2,000 in the first year of the pandemic. In 2021, 853 branches were closed in Q1, followed by 811 and 735 in the second and third quarter of last year. The number of branch closures dipped to 307 in Q4 2021 before surging back up to 809 in the first quarter of this year.

According to S&P, 28 US banks have reduced their overall branch footprints by more than 20% since the beginning of 2020.

The largest reductions since January 2020, by percentage, were made by HSBC, which shut more than 80% of its branches, Thrivent Trust (80%) and Axiom Bancshares (64%). Measured in the number of branches shut, Truist topped the list with 670 branch closings, followed by US Bancorp (USB) at 654, Huntington Bancshares (354) and Capital One (168).

While the pace of branch closures has slowed, the announcements keep on coming: this week, Customers Bank said it would close half of its 10 branches in southeastern Pennsylvania. Twelve Louisville, KY-area bank branches closed in the first half of 2022, including four PNC outlets.

As what has been called “The Great Consolidation” in the banking industry began in earnest in 2020, branch closures were accelerated by lockdowns that curtailed retail shopping, as in-store outlets residing in groceries and other stores were among the first to be chopped when bank footprints were reduced, GlobeSt.com reported.