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Branches are vital to attracting new customers and cross-selling to existing ones, but they're also expensive. Some banks, like Washington Federal (WAFD) and U.S. Bancorp (USB), continue to add branches. But most institutions are focused on pruning their networks to cut costs. Here's a sampling of how banks are adjusting branch networks to suit changing strategies.

Related Article: It's Long Past Time to Kill the Bank Branch

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Pruning at Regions Financial (RF)

Regions, of Birmingham, Ala., plans to shutter 30 of its roughly 1,700 branches in the first quarter to cut expenses. In an analyst earnings call, Chief Financial Officer David Turner said that the $117 billion-asset company has not yet quantified the annual savings from the branch closures.

Related Article: Regions, Synovus Post Noisy But Respectable Quarters

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PNC Downsizes

Pittsburgh-based PNC Financial (PNC) is pruning its branch network, but rather than having fewer branches its main goal is to have smaller ones. The $320 billion-asset company is in the midst of years-long program to shrink the size of many existing branches, and most new ones are half or one-third the size of more traditional outlets. PNC is also experimenting with pop-up branches to test new markets and consumer preferences. The one pictured here, located in Atlanta, is made of old shipping containers.

Related Articles: PNC Expects 25 Net Closures in 2014

Let Pop-Ups Crop Up

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U.S. Bancorp Bulks Up in Chicago

The Minneapolis company has long been eager to bulk up in Chicago and it got its wish in early January when it struck a deal to buy 94 Charter One branches from RBS Citizens Financial Group. The deal would roughly double U.S. Bank's deposits in the Chicago area, to $11.3 billion.

Related Article: U.S. Bancorp to pay $315M for RBS' Chicago Branches

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Huntington Goes In-Store

The $59 billion-asset bank added 32 branches in supermarkets last year while closing roughly that same number of free-standing branches it considered to be underperforming. Huntington (HBAN), based in Columbus, Ohio, plans to open about 14 more in-store branches this year.

Related Article: Bank CEOs Struggle to Move Beyond Cost-Cutting

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KeyCorp Cuts

Cleveland-based Key (KEY) shuttered 16 branches in the fourth quarter and additional closures are possible in 2014 as it tries to improve productivity and increase efficiency. The $92.9 billion-asset company has cut a total of 81 branches, or roughly 8% of its network, since it launched an expense-cutting initiative in 2012.

Related Article: Regional Bankers Upbeat about Consumer Lending

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Washington Federal Expands Out West

Just weeks after completing its acquisition 51 branches in the Northwest and New Mexico from Bank of America (BAC), the Seattle company announced on Jan. 23 that it is buying 23 more B of A branches in Arizona and Nevada. The deal will give the $14 billion-asset Washington Federal nearly 260 branches in eight states.

Related Article: Washington Federal to Acquire 23 B of A Branches

(Image: Bloomberg News)

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Hancock Consolidates

Struggling with rising expenses since its 2011 acquisition of Whitney Bank, the Gulfport, Miss., company is aggressively pruning its branch network, which stretches from Florida to Texas. It closed 26 of its branches this past summer, sold seven Houston branches to a credit union in December and most recently sold three Louisiana branches to a community bank. To cut costs further, the $19 billion-asset Hancock (HBHC) is planning to merge its Whitney Bank and Hancock Bank charters early this year.

Related Article: Hancock Misses Earnings Estimates on Efficiency Costs

(Image: Bloomberg News)

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Susquehanna Tries Leasebacks

One way to cut overhead is by selling branches and leasing them back. Lititz, Pa.-based Susquehanna Bancshares (SUSQ), with $18.8 billion of assets, sold 30 of its branches in Pennsylvania, Maryland and New Jersey to a real estate firm in December with plans to lease them back for 15 to 26 years. It netted pretax income of nearly $38 million on the deal and, over time, expects to lower expenses related to those branches and use the savings to invest in its business.

Related Article: Susquehanna Deal a Model for Lowering Branch Costs

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Fulton Cuts Back

Fulton Financial (FULT), of Lancaster, Pa., said in its fourth-quarter earnings call that it is shuttering 14 branches in Pennsylvania, Maryland and New Jersey as part a plan to reduce annual overhead by $8 million. "We just don't need branches as close together as we did in the past," Phil Wenger, Fulton's chairman, president and CEO, said on the call.

Related Article: Fulton Financial Closing 14 Branches under $8M Cost-Cutting Plan

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National Penn Retrenches

Another Pennsylvania company, National Penn Bancshares (NPBC) in Boyertown is planning to close nine of its branches to save money. The $8.6 billion-asset company also said in its fourth-quarter earnings announcement that it is laying off an undisclosed number of employees and consolidating its administrative facilities in a new corporate headquarters. "The strength of National Penn's balance sheet and the expense reduction initiatives provide us with a solid base from which to grow," said President and CEO Scott Fainor.

Related Article: National Penn Closing Nine Branches

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CenterState Rationalizes

In an effort to shave $6 million off its annual expenses, the Davenport, Fla., company has put five of its branches up for sale and is planning to convert two others into loan production offices. John Corbett, the CEO of CenterState's (CSFL) banking unit, said that the seven branches are among the company's least profitable, with the fewest number of customers and related service charge income and are in markets where "we were not achieving loan production and didn't think that we would be able achieve high levels of loan production in the next few years."

Related Article: CenterState in Fla. Closing Seven Branches, Cutting 57 Jobs

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