Bank of America may sell branches in smaller markets

A report published this week says Bank of America has begun selling branches in markets that are less important to it, and many more branch sales could be on the way in smaller markets — including four Kansas cities — where it has had little or no deposit growth.

The report by SNL Financial, a financial services industry analysis firm, said the bank sold 15 branches in Maine and five in Iowa in separate transactions this year.

In both cases, the report said, branches in those states were in less populated cities and towns — so called “noncore markets” — versus branches in the country’s 30 biggest metropolitan areas.

The SNL report reasons that since the bank plans to close 750 more branches over the next few years, the bank could do so in areas where it doesn’t have a commanding market share and in communities with populations of fewer than 150,000 people or metropolitan statistical areas with fewer than 500,000 people.

In a chart included with the report, it identifies 20 micropolitan and metropolitan areas in which, one, the bank has a presence, but, two, have the fewest people and the least growth in deposits, year over year. On that list are Great Bend, with 4 percent market share and minus-3.24 percent deposit growth; Hays, with 5.6 percent market share and minus-7.33 percent deposit growth; McPherson, with 5.2 percent market share and 2.54 percent deposit growth; and Liberal, with 9.3 percent market share and minus-3.93 percent deposit growth.

SNL said the data is based on the Federal Deposit Insurance Corp.’s deposit data for June 30, 2011.

A Bank of America spokeswoman said the bank would not comment on the report.

“As for Kansas, we evaluate and adjust the distribution network and have nothing to report on those communities,” Diane Wagner, a Bank of America spokeswoman in Chicago, said in an email Wednesday.

One of the authors of the report, Nathan Stovall, doesn’t think the Wichita MSA is one of the markets the $1.4 trillion bank would exit.

“I don’t think it’s markets where they have an active presence and are No. 2 in market share,” Stovall, SNL’s New York bureau chief, said of possible branch sales.

According to the same FDIC data SNL used for its report, Bank of America is second only to Intrust Bank in deposits in the Wichita MSA, accounting for 14.82 percent of the area’s deposits. It operates 15 branches in the Wichita area.

The bank, however, did close its McConnell Air Force Base branch last year and another at 501 N. Woodlawn in 2009.

The report also said that if the bank did choose to sell its branches in Kansas or elsewhere, it won’t get the premium it might have a few years ago. SNL said the median premium on deposits ratio fell to 3.68 percent this year from 3.92 percent in 2011. In 2007, SNL said, the ratio was 7.84 percent.

It’s true, Stovall said, that banks use deposits to fund loans and provide other services. But lending activity remains low and most banks are “too liquid” with deposits, he said. In Bank of America’s situation, eliminating a few billion dollars in deposits isn’t going to be harmful to the bank, which is based in Charlotte, N.C.

“Deposits aren’t worth what they are in a normal growth environment,” Stovall said.

“Some of the markets we are showing here,” he said of the report, the Bank of America has “relatively small market share.”