PNC, U.S. Bank closed roughly one in 10 branches in 2023

December 15, 2023 5:51 PM

The overall pace of bank branch closures slowed in 2023, but certain banks still slashed the size of their brick-and-mortar networks substantially.

U.S. banks closed 2,118 branch locations between January and the end of October, according to data from S&P Global Market Intelligence. That was a 19% decrease from the 2,614 branches shut down over the same period in 2022.

Roughly 22% of the closures were carried out by two super-regional banks — PNC Financial Services Group and U.S. Bancorp — both of which shuttered around 10% of their branches.

Across the industry, the total number of branches fell for the 14th straight year in 2023. There were 77,690 active bank branches nationwide at the end of October, according to S&P data, down from 79,000 branches at the end of 2022.

While larger banks top the list of financial institutions that have trimmed their physical presences in 2023, banks big and small are closing branches to reduce expenses and reinvest some of the resulting savings in their digital capabilities.

The appeal of saving on staff, facilities and other branch-related costs has driven merger and acquisition activity in recent years, especially at banks with plenty of branches. After longer-than-usual deal approval processes for many of those deals, some acquirers have finally managed in 2023 to execute planned branch closures.

Here is a closer look at the five banks that closed the largest shares of their branches this year, through October.

PNC Financial Services Group

10% of network closed, or 239 branches

PNC has pointed to falling foot traffic and the potential cost savings from shutting down branches as drivers of its strategy.

"[Branch traffic] has declined steadily over the last 10 years, and we expect that will continue," PNC Chief Executive Officer Bill Demchak said at the bank's annual shareholder meeting in April. "We'll adjust our physical footprint and increase our digital footprint, if that's what clients demand."

Pittsburgh-based PNC took several other measures to control expense growth in 2023. For example, the bank cut 4% of its employees in October, citing a slowdown in lending activity. The headcount reductions are expected to save PNC roughly $325 million.

Earlier this month, Democratic Rep. Maxine Waters asked PNC, along with Wells Fargo and Royal Bank of Canada's City National Bank unit, to open branches in her congressional district, which includes parts of Los Angeles.

PNC opened 19 new branches nationwide in the first 10 months of 2023. That is equivalent to 8% of the 239 branches the bank closed during the period. The $558 billion-asset bank had 2,303 branches at the end of the third quarter.

U.S. Bancorp

9.5% of network closed, or 221 branches

U.S. Bancorp's 2022 acquisition of MUFG Union Bank paved the way for some of its branch closures this year. The closures associated with the deal were "typically within a mile of each other," CEO Andy Cecere said at an industry conference in June.

The $8 billion purchase of Union Bank gave the $668 billion-asset U.S. Bancorp a larger foothold in California. But the Minneapolis-based parent company of U.S. Bank, which opened six new branches between January and October, has no plans to build a branch network that stretches from coast to coast.

Instead, U.S. Bancorp hopes to grow its branch presence in "a select set of faster-growth areas," Gunjan Kedia, the bank's vice chairman of wealth, corporate, commercial and institutional banking, said at an industry conference in November.

"I don't think we have a plan to open 1,000 more branches in every state," Kedia said.

Cecere expects U.S. Bank's branch count to hover around 2,200 branches in the coming years, he said in June. The bank operated close to 3,200 branches in 2018, he said.

Truist Financial

5.9% of network closed, or 119 branches

Truist has closed branches each year since it was created through the 2019 merger of SunTrust Banks and BB&T Corp.

This year was no different. The $543 billion-asset bank closed 119 branches between January and October. It opened a single branch over the same period.

Truist has no plans to slow down branch closures in 2024. Further consolidation of the bank's physical footprint will play a key role in delivering on a plan for $750 million in expense reductions in 2024 and the early part of 2025, company executives said in October.

The Charlotte, North Carolina-based bank expects $250 million of those savings to come via organizational restructuring, which includes not only closing branches, but also consolidating certain business lines and reassessing compensation.

Wells Fargo

5.6% of network closed, or 249 branches

Wells Fargo has seen consistent declines in teller transactions and other kinds of in-branch business, Chief Financial Officer Michael Santomassimo said in April.

The bank said in July that it had reduced total branches by 4% and cut branch staff by 10% from a year earlier.

"That will continue to hopefully be the case," Santomassimo said.

Still, Wells hopes to expand its presence in certain attractive markets, including Chicago and the New York City boroughs of Brooklyn and Queens. The $1.9 trillion-asset bank currently operates seven branches in Chicago and plans to add 23 new locations, CEO Charlie Scharf said during an October earnings call.

"Branches continue to play an important role in the way we serve our customers," Scharf said.

Wells Fargo opened nine new branches in the first 10 months of 2023, according to S&P data. The San Francisco-based bank counted 4,355 branches at the end of the third quarter, according to regulatory filings.

JPMorgan Chase

2.5% of network closed, or 121 branches

JPMorgan stands out from the other banks on this list because it has opened nearly as many branches in 2023 as it has closed, according to S&P data. The $3.9 trillion-asset bank shuttered 121 branches and opened 118 between January and October.

About 21 of those closures involved former First Republic branches that had "relatively low transaction volumes" and were "generally within a short drive from another First Republic office," the bank said in a statement earlier this year. JPMorgan acquired parts of the failing San Francisco-based bank, including 84 branches across California, in a $10.6 billion deal that came together in the spring.

Through October, JPMorgan's 2023 closures represent about 2.53% of its 4,787 branches in operation at the end of 2022. After accounting for the branches added in the First Republic acquisition, JPMorgan's 2023 closures represent close to 2.48% of its total branches.

The nearly equal number of newly opened branches is part of the bank's plan to strategically build its presence and boost market share in areas that have an affluent customer base or a fast-growing local economy.

Even during periods of intense consolidation in recent years, banking giants like JPMorgan have touted the importance of having centrally located branches that double as bank billboards in attractive markets.

JPMorgan has so thoroughly consolidated its physical presence that it is running out of branches to close, one of the bank's top executives said earlier this month.