Hoosier Banker 39 wave of closings can be attributed to a wave of mergers and failed bank acquisitions following the financial crisis. There was an immediate opportunity to reduce cost through the shuttering of inefficient office locations. Branch closings were also influenced by earnings pressure from low interest rates and rising regulatory costs. More recently, changing consumer preferences and improvements in financial technology have further spurred the reduction in branches. Customers increasingly use ATMs, online banking and mobile apps to conduct routine banking business, meaning banks can close lessprofitable branches without sacrificing market share. Uneven Changes The reduction in offices has not been uniform. According to the Federal Deposit Insurance Corp., less than one-fifth of banks reported a net decline in offices between 2012 and 2017, and slightly more than onefifth reported an increase in offices.2 Just 15 percent of community banks reported branch office closures between 2012 and 2017. And though closures outnumber 1 Ensign, Rachel Louise; Rexrode, Christina; and Jones, Coulter. “Banks Shutter 1,700 Branches in Fastest Decline on Record.” Wall Street Journal, Feb. 6, 2018. 2 Hinton, Nathan L.; Thieme, Derek K.; and Woodhead, Angela N. “Factors Shaping Recent Trends in Banking Office Structure for Community and Noncommunity Banks (PDF).” FDIC Quarterly, 2017, Vol. 11, No. 4, pp. 31-40. them, new branches continue to be opened. It’s also important to note that deposits continue to grow – especially at community banks – even as the number of institutions and branches decline. The Industry of the Future It seems inevitable that this long-term trend in branch closings will continue as consumer preferences evolve, and financial technology becomes further ingrained in credit and payment services. Although it is unlikely that the United States will end up resembling other countries with relatively few bank charters, it seems certain that consumers and businesses will increasingly access services with technology, no matter the size or location of bank offices. This change creates opportunities, as well as operational risks, that will need to be managed by banks and regulators alike. HB Discover the personal touch, the seamless service, and the expertise of our banking professionals. Make the mark. Rob Bondy robert.bondy@plantemoran.com Mike Stearns michael.stearns@plantemoran.com Steve Schick steve.schick@plantemoran.com plantemoran.com F C I FloodplainConsultants Inc. "We visit the site!" www.floodplain.com TM PREFERRED SERVICE PROVIDER OF THE IBA. Serving Indiana lenders since 1991 HOW IS YOUR FLOOD ZONE DETERMINATION PROVIDER HANDLING BORDERLINE CASES? Flood Zone Determinations LOMA/LOMR Assistance Flood Insurance Guidance Interfacing with: Encompass 360, Calyx Point, Byte Pro & Fiserv We take pride in our industry leading accuracy and customer service. Find out what a true “community bank” minded company we are. Craig Callahan 800-945-0246 ccallahan@ oodplain.com
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