Seeking Alpha

Christopher Menkin's  Instablog

Christopher Menkin
Send Message
Christopher "Kit" Menkin is of editor LeasingNews.org (http://www.leasingnews.org/), an internet trade publication for the finance/leasing industry. He has 41 years experience in the finance/leasing industry as well as being a founder of a commercial regional bank and serving on... More
My company:
Leasing News
  • Banks Slash Branch Totals In 2013  0 comments
    Jan 29, 2014 1:16 PM

    SNL Financial Report

    In an effort to offset sluggish revenue trends amid a slow-growth environment, KeyCorp in mid-2012 launched a companywide efficiency initiative aimed at carving out costs and boosting the bank's bottom line.

    At the heart of the effort: branch consolidation. Between June 2012 and the end of 2013, the Cleveland-based company consolidated 81 branch locations, or approximately 8% of its franchise. Over the past 18 months, Key implemented annualized cost savings of $241 million.

    "Efficiency and positive operating leverage are becoming part of the fabric of Key," Chairman, President and CEO Beth Mooney told analysts this month after posting fourth-quarter 2013 net income attributable to common shareholders of $224 million, or 25 cents per share. That was up from $197 million, or 21 cents per share, a year earlier.

    Key is hardly alone. Banks collectively reduced the U.S. branch total by 1,487 locations in 2013, an SNL analysis found.

    Bank of America Corp., PNC Financial Services Group Inc. and SunTrust Banks Inc. closed even more branches than Key during 2013. Capital One Financial Corp., Hancock Holding Co. and Citigroup Inc. were among others actively trimming branch counts, as lenders of all sizes grapple with weak revenue growth and heavy compliance costs that are motivating them to reduce the fixed expenses tied to large branch networks. . [This is also a response to the continuing consumer trend toward mobile financial transactions that further reduces the need for brick-and-mortar locations. Editor]

    As previously reported in Leasing News, many companies, in addition to shuttering or selling off branches, are working to reduce the number as well as the size of their branches or are at least considering the possibility. Webster Financial Corp. is closing branches and downsizing others. Some branches that average 3,000 square feet in size are undergoing redesigns that will cut space in half, the company has said.

    Mergers and acquisitions also play a role in branch reductions. Banks often consolidate branches with overlapping territories after closing deals to save costs. And many industry observers anticipate that M&A will pick up in 2014, particularly among community banks.

    Smaller banks are wrestling with lofty compliance costs, slow loan growth and tough competition from larger banks, leading many analysts to believe that more of these lenders will look to sell this year. "I think the pace picks up significantly," Mark Fitzgibbon, director of research at Sandler O'Neill and Partners LP, told SNL.

    In terms of geography, the greatest levels of reductions were in some of the most populous metropolitan regions in the country: Philadelphia, Chicago and New York City. The Los Angeles area bucked that trend, with branch totals rising in 2013.

    Full Report Here:
    http://www.snl.com/InteractiveX/Article.aspx?cdid=A-26626605-12589

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Back To Christopher Menkin's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.