A report released Tuesday said for every bank branch that opened in Kansas in the past year, three closed.
The SNL Financial report said between third quarter 2011 and fourth quarter 2012, 16 branches were opened in the state and 50 were closed.
Kansas was among 14 states that saw a net decline of between 26 and 50 branches during the period, the report said.
One local banker said he’s not surprised by the Kansas numbers, and he expects the trend to grow.
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“This is the tip of the iceberg,” said Tom Page, CEO of Emprise Bank.
Page said three factors are driving the increased closures, two of which are long-term. One is a shift in population to larger cities in the state, making branches in smaller towns and cities “unnecessary and duplicative.” The other long-term factor is the shift to electronic banking — online and mobile — “reducing the need for branches and the volume that runs through them,” Page said.
He said that economics is a short-term factor that has accelerated branch closings. Tepid loan growth and persistently low interest rates continue to squeeze bank revenue, accelerating branch closings. “They’re expensive to build, they’re expensive to maintain and they’re expensive to operate,” Page said.
Frank Suellentrop, president of Legacy Bank, said low rates and low loan demand have made the past several years challenging for branch operations.
“For a number of years it … has been more difficult to justify a branch when there’s not sufficient loan activity,” Suellentrop said. That’s why the $276 million-asset bank hasn’t built any more branches than the six it operates in the Wichita area, he said.
Page and Suellentrop said there are customers who use online and mobile banking as well as the branch. And there are instances, they said, where a customer has an issue or problem that can’t be resolved without face-to-face contact with bank staff.
Page — whose $1.5 billion-asset bank operates 42 branches in Kansas — said he doesn’t think this report signals the beginning of the end for bank branches.
“At one time the branch had 100 percent of the market share of the delivery channel,” he said. “It still holds, arguably, the largest slice of the pie. And while that continues to become somewhat smaller, it will be generations before it goes away.”
The SNL report said there were nine states – in the upper Midwest, Northeast and Southeast – that saw the greatest net decline in branches in the country, between 51 and 116, the report said.
California led the nation in net branch openings during the period, with 42.
The report said that JPMorgan Chase had the most net branch openings in the period. Chase opened 347 branches and closed 88, the report said. Chase does not operate any branches in Kansas.
Bank of America, which has a significant presence in Wichita and the state, had the most branch closures in the period. The report said Bank of America closed 301 branches and opened 16.