New Fed Survey Examines Effects of Branch Closures on Communities

As bank consolidation continued, between 2012 and 2017, the number of bank branches declined by 7% across all counties, according to a new research study published by the Federal Reserve today. Urban communities experienced a net loss of 5,756 branches between that period, while rural communities experienced a net loss of 1,533 branches. The Fed also found that more than 100 banking markets went from having at least one bank headquartered there to having no bank headquarters within the survey period.

While urban communities lost more total branches than rural areas, the survey noted that the effect of branch closures tends to be magnified in rural areas. Of the 44 counties the Fed considered “deeply affected” by branch closures—those that had 10 or fewer branches in 2012 and lost at least 50% by 2017—89% were rural counties.

Community members interviewed during Fed focus groups noted that when a bank branch is closed, the effects are not limited to financial services access alone—the community also loses an important source of financial advice, important civic leadership and the personal relationships they had with their bankers, they said.