Coming off of two consecutive record years, U.S. bank branch closures have now slowed considerably.
After the COVID-19 pandemic greatly accelerated digital banking, U.S. banks began shuttering branches at a rapid pace, leading to a record number of closures in both 2020 and 2021. While branch closings still outpace openings, the pace of closures has slowed in the past two quarters.
In 2021, U.S. banks closed more than 800
Even as technology takes a larger role in banking, branches are still vital, industry experts said.
"The branch remains the center of the banking universe," Dave Martin, a retail banking strategist and the founder of BankMechanics, said in an interview with S&P Global Market Intelligence. "Customers still base their banking decisions like where to bank by access to a bank branch."
Branches are also still a necessity for more complex transactions that involve in-person signings or larger monetary amounts, said Paul Davis, director of market intelligence at Strategic Resource Management.
Further, branch closures are likely plateauing after the high rate of closures during the pandemic, he said.
"A lot of people went to digital channels and remote channels to kind of right size," Davis said. "Maybe everybody feels like they've right-sized it, and they're just waiting to see what the next set of metrics or the next kind of adoption rates are."
Which banks have opened the most branches since the pandemic?
Cullen/Frost Bankers Inc. topped the list of U.S. banks with the most net branch openings since 2020. As the company worked on its Dallas and Houston expansions, it has opened 19 net branches, bringing its total number of active branches to 174, an active branch increase of 12.3%, according to S&P Global Market Intelligence data.
The San Antonio-based company is still seeing account growth from traditional branches, Cullen/Frost Chairman and CEO Phillip Green said during the company's second-quarter earnings call. Moreover, when consumers are looking for a banking relationship, research shows that the biggest factor they consider is proximity to a branch, Green said on the company's first-quarter earnings call in April.
Pinnacle Financial Partners Inc. came in second on the list with 15 net openings, or an increase of 13.4%.
Branch openings by state
Among the 50 states, high-growth states posted the most branch openings. Texas topped the list with 346 openings since Jan. 1, 2020, and Florida followed the Lone Star State with 192 openings in the same timeframe.
High-growth regions, such as the Southeast, mid-Atlantic and Northeast, tended to see more openings compared to the rest of the country. Many banks are targeting high-growth areas of the country for branch expansions. For example, Fifth Third Bancorp plans to add 100 more branches throughout the Southeast over the next three years, President and CEO Timothy Spence said during a conference in September.