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Citigroup has agreed to sell its remaining 41 branches in Texas to BB&T, in an ongoing effort to trim its branch network.
September 3 -
Citigroup issued quarterly results that pleased the market by simply not being as bad as they could have been. Yes, Citi spent $7 billion to settle a mortgage securities probe, and there are still more legal costs coming. But some segments strengthened, suggesting Citi may have hit bottom and has nowhere to go but up.
July 14 -
Citigroup, which has spent the past few years rethinking its undersized U.S. branch network, on Friday unveiled plans to reformat its physical locations, starting this year in Miami. Executive William Howle explained the changes in an interview.
March 14 -
AUSTIN — Four years after entering Texas with its purchase of First American Bank in Bryan, Citigroup Inc. is looking for an exit strategy.
July 10
Citigroup's retail exit from a hot economy like Texas seems odd on the surface, but many consider it a necessary move and it could mark Citi's last major branch reduction for awhile.
The third-largest U.S. bank agreed this week to sell 41 of its remaining 44 branches in the state to BB&T, and the other three will be closed or converted to other uses, company spokesman Andrew Brent said.
Citigroup will have shrunk its branch network by 11% since yearend once it completes the sale to BB&T, bringing the number of branches to 868 throughout the country.
Such efforts may help tighten operating costs and expenditures, and only limited cuts are expected going forward. Citigroup, which took from North America only 44% of its global annual revenue last year the smallest percentage among its peers and exactly half that of Bank of America will now operate in only thirteen states.
Future shedding will be a pruning, not a hacking, Raymond James analyst Daniel Marchon said. If and when there are more divestitures, you would not expect them to be large, given how much theyve already shrunk back to urban areas.
The trimmings have helped achieve results. Net operating expense growth, for example, may grow less than 1% in 2015, according to Matt Burnell, senior equity analyst at Wells Fargo Securities. Better operating leverage driven by reduced branch count, growth in card balances and other factors are expected to generate higher revenue growth than last year's, he said.
We believe continued shrinkage of the branch footprint (e.g., recent Texas branch sales to BB&T) and back-office consolidations will continue to offset investment spending, keeping expense growth slightly below revenue growth in 2015, Burnell wrote clients in a research note Thursday.
Citigroup has wanted to get out of Texas for years. It acquired more than 130 branches there in 2005 when it bought First American Bank, and Texas was its No. 5 state market in terms of branches. But in 2008
It has unloaded branches in Texas since then, including a previous sale of 21 branches to BB&T in June.
The company emphasizes that it will continue to provide commercial, investment banking and other non-retail services in Texas, and that its remaining 9,500 employees will be its second-largest concentration of workers by state.
The binge-and-purge pattern has been repeated elsewhere.
The very largest banks, those with more than $50 billion of assets, drove a branch boom that lasted for two decades, increasing their share of U.S. branches to 42% from 28% over the course of a decade, according to Oliver Wyman consulting subsidiary Celent.
U.S. banks closed a net 1,487 branches last year, the highest number of closures on record, according to SNL Financial.
There could still be as much as a 30%-40% winnowing within U.S. retail banking, but additional cutbacks are expected to be piecemeal and gradual, said Celents Bob Meara, a senior analyst at the firm. The reason: digital channels are great for transactions, but they arent selling products or offering services. Branches still matter.
In recent months, Citigroup's banking unit has quietly slipped out of Pennsylvania and Delaware, where it had a minimal branch presence, Federal Deposit Insurance Corp. data and bank filings show. Other reports indicate the bank was this year
The bank closed more than 70 branches in North America between July 2013 and July 2014, and it plans to continue doing so in select, less urban areas, Chief Financial Officer John Gerspach said during an earnings call in July.
Its branch count has dropped by more than 100 since yearend counting the latest BB&T deal, according to quarterly filings.
During the same period, Citigroup increased average retail loans by 11% and average deposits by 4% including 11% growth in checking account balances, Gerspach reported.
Still, many other challenges lie ahead for Citigroup.
Investors remain the most anxious about the company's capital preparations to pass the next annual stress test and annual review conducted by the Federal Reserve. Citigroup was