Banks reportedly are shutting brick-and-mortar physical locations at the swiftest clip in decades as customers continue to conduct more business online.
The number of U.S. bank branches plunged by more than 1,700 in the 12 months ended in June 2017, the biggest decline on record, according to a Wall Street Journal analysis of federal data.
Banks have realized they could maintain deposit levels with fewer locations in a digital age where customers often prefer banks’ mobile apps and ATMs.
Branch numbers also fell in the second half of 2017, according to related data submitted to bank regulators and reviewed by the Journal. “That would add to the thousands of locations closed following the financial crisis, and is the longest stretch of closures since the Great Depression,” WSJ.com explained.
Falling walk-up customer traffic in major cities and surrounding suburbs forced banks to combine branches, while many financial institutions fled low-demand rural areas entirely.
Banking officials examine deposit levels at each branch and commute time to the nearest location before deciding on branch closures. “We continue to evolve and optimize our branch network to ensure that we’re operating as efficiently and effectively as possible,” a Capital One spokeswoman told the Journal.
Meanwhile, many banks have recently posted record profits in the wake of the cutbacks.
Bank of America’s adjusted earnings in 2017 matched its highest yearly profit ever, the Journal reproted. The bank closed or sold more than 1,500 branches since 2009, including most rural locations. “The closures have helped the bank save on occupancy and employee costs, bringing down overall expenses. The lower expense levels have bolstered bank profit,” the Journal explained.
Meanwhile, banks have also been enjoying an easing of regulation under the pro-business agenda of President Donald Trump.
That is, despite Wells Fargo & Co.’s unprecedented punishment that bans it from growing, Bloomberg reported.
But some analysts were quick to point out that the Federal Reserve’s aggressive enforcement action against the scandal-ridden bank -- announced after markets closed Friday -- shouldn’t be taken as a sign that regulators are getting cold feet about rolling back rules.
“No one should conflate regulation with enforcement,” said Ian Katz, an analyst at Capital Alpha Partners LLC in Washington. “There’s a deregulatory effort that is going on and it is going to continue.”
For his part, veteran bank analyst Dick Bove says there will be no reduction in the ability of Wells Fargo to operate the way it has historically.
Shares of Wells Fargo fell 8 percent Monday after the Fed said Friday it is restricting the bank's size in response to "widespread consumer abuses."
"This is 1,000 percent political. It has nothing to do with the economics of the company," the research analyst at the Vertical Group said in an interview with CNBC.
Bove called the sell-off "incorrect."
(Newsmax wire services contributed to this report).
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