The latest S&P Global Market Intelligence statistics for bank branch closures shows U.S. banks and thrifts opened 101 branches and permanently closed 200 in May. This left 82,474 active U.S. branches as of May 31. Over the last 12 months, the industry has closed 4,322 branches and opened 1,140, according to S&P Global data.
This updates our previous post in the issue of bank closures.
Monitoring these statistics is important to us. A recurring theme in any discussion about the effect of draconian price caps on small dollar loans has been the idea that US banks will step in to pick up the slack, as installment lenders find themselves unable to make sustainable loans in states like Illinois.
The foolishness of this claim has been discussed elsewhere on this website. It is addressed in our Frequently Asked Questions. The bottom line is, banks cannot make small-dollar loans profitably, so they would prefer not to make them at all.
This is clear in the the message that banks are sending communities, especially rural ones, with an increasingly rapid cadence of bank branch closures.
Banks are unlikely to be in a position to serve the credit needs of underserved communities as they draw in their assets in communities they already serve.
For more on banks and small dollar lending, look at NILA’s Frequently Asked Questions, question 27.
SOURCE: S&P Global