Bank branches vanishing in small towns

[jmyrlefuller]

http://www.usatoday.com/story/money/business/2014/03/02/bank-branches-vanishing-in-small-towns/5931551/

by Victor Epstein
March 2, 2014

Empty bank branches are starting to litter small-town business districts across the nation as the financial institutions that own them focus their resources on larger communities.

Ron Tate, the mayor of Runnells, Iowa, has been trying to get a new bank to open shop in his town, population 506, ever since Great Western left in September.

Banking industry experts say a similar trend is beginning to play out nationwide as banks respond to new regulations cutting into the revenue they previously derived from overdraft fees, credit card transactions and mortgage lending. U.S. bank earnings are up, but cost-cutting is responsible for most of that growth.

The number of Iowa bank offices and branches fell nearly 3 percent from 2009 to 2013, and was down a little over 3 percent nationally, according to the Federal Deposit Insurance Corp.

The situation in Runnells is not an outlier but is typical of what's going on across the nation. The disproportionately large regulatory burden on community banks is partly to blame.

(excerpted)

[truth_seeker]

Chase has opened several brand new branches alone, in my town of 200,000 in the OC suburbs of Lost Angeles.

This is addition to the locations they got, when they took over Washington Mutual, who in turn had taken over Home Savings and Loan, the nation's largest of its kind at the time, based in Lost Angeles County.

Home Savings had big impressive buildings, to give the impression you were safe dealing with them. And you were; they had managed their affairs conservatively to reach NO. 1 ranking.

WaMu reversed that by their aggressive lending practices, and in just a few years along with other irresponsible banking institution members, brought the nation's economy to its knees.

Anyway Chase is not scrimping on branch location; quite to the contrary they seem to be going up within one mile of each other.

So while Wells Fargo and B of A seem to have gove the other way, ATMs and online banking, Chase is all about neighborhood branches.

 

[Oceander]

Chase does have a very large branch presence; it's one of the things that makes them attractive because it means that both fee-free ATMs and quick personal help - like getting a couple of emergency checks on one's checking account printed out, or getting your ATM card immediately replaced because the magnetic stripe just went kerfluey (happened to me three weeks ago) - are just around the corner, so to speak.

Viz. the disappearance of branches in small communities:  that suggests to me the opportunity for smaller investors interested in banking to open up small startup community banks, of the sort that used to be predominant in the country.  Of course, that would also require some examination of current federal and state regulation to see just how hard it is to start up a new small bank under current regulatory and compliance burdens - I suspect that in many instances the compliance costs alone - compliance that really doesn't apply to small community banks - make it impossible to open up the sort of banks that would be able to serve this tiny communities and still earn enough of a profit to make it worth the while to open them.