By debramillet @ Adobe Stock
For years, America’s banking sector has been consolidating and closing local branches. Perhaps that phase of banking is over, as consumer are pushing bank on branch closures by bringing their money to smaller local banks. Imani Moise reports in The Wall Street Journal:
Jana Dalton used the same bank for 40 years, depositing checks and withdrawing cash from the account she first opened at age 16. Now, she’s switching banks.
PNC Financial Services Group, the sixth largest U.S. lender, bought her hometown bank. Two years ago, it closed Dalton’s original branch and has since shut down three nearby locations. Her newest local branch, 9 miles away, sometimes turns her away when she doesn’t sign up for an appointment online.
“There’s too many bells and whistles and we just need to back up and go back to customer service,” said the golf-course operator in Miamisburg, Ohio. Her new local bank, Farmers & Merchants Bank, has $291 million in assets compared with PNC’s $562 billion.
Some bank customers are going small, pushing back against a wave of consolidation that has concentrated deposits and loans in a handful of the largest banks. Many have found that making a switch not only gets them more face time with bankers, but they are also earning more and paying less.
People wanting a smaller bank have an ever-smaller number to choose from. Bank mergers are expected to accelerate this year as lenders seek safety in size after a series of regional bank failures in 2023. Capital One’s $35 billion deal to acquire Discover Financial Services in February already made 2024 a bigger year for bank mergers than the previous two years combined.
While the biggest banks are getting bigger, the smallest are growing too. Community banks, which typically have less than $10 billion in assets and a concentrated footprint, grew deposits by about 1% in the third quarter from a year earlier. Credit unions grew deposits by a similar amount. Their loan books grew by 10% and 9%, respectively. Both far outpaced the broader banking industry, according to federal data.
Midsize banks are struggling. Three failed this past year after runs on their deposits. And New York Community Bancorp has recently been under pressure.
During the tumult, large corporate clients, which often have more cash in their accounts than can be federally insured, moved billions of dollars to the biggest banks because they were seen as too big for the government to let them fail. Customers with lower balances, such as consumers and local businesses, often opened accounts at smaller banks, executives said.
“People are being a little more selective, and really going more for the convenience and the local service levels,” said Tom O’Brien, chief executive of Sterling Bancorp, a community bank that grew deposits by $50 million, or 3%, last year.
Read more here.
If you’re willing to fight for Main Street America, click here to sign up for my free weekly email.
