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'What Are We Going To Do?': Towns Reel As Banks Close Branches At Record Pace


The pandemic drove record numbers of bank branches to close. It's part of a years-long trend toward online banking. But people who need a local physical branch may find nothing. Just as some places are food deserts, neighborhoods with no groceries, NPR's Scott Horsley reports on the risk of bank deserts.

SCOTT HORSLEY, BYLINE: Moorhead, Miss., is a town of under 2,000 people in the heart of the Delta. It was once an important commercial crossroads where the Southern Railroad met the Yazoo Delta line, a junction memorialized in W.C. Handy's "Yellow Dog Blues."


HORSLEY: Moorhead is still an important tourist stop on the Mississippi blues trail, but its commercial clout has declined over the decades. Mayor George Holland says the local bank branch pulled up stakes a few years ago.


GEORGE HOLLAND: When I heard that Regions Bank was moving out, I'm thinking, what are we going to do? That was actually the only bank in our community. And the next closest bank was probably 8, 9 miles to Indianola.

HORSLEY: That's a minor inconvenience if you have a car, but a real hardship for those who don't. More communities are wrestling with that as banks permanently closed a record 3,300 branches last year. U.S. Bancorp closed about a quarter of its branches. CEO Andrew Cecere told financial analysts, thanks to the pandemic, more of his customers have switched to banking on smartphones and computers.

ANDREW CECERE: Seventy-seven percent of our customers are using the digital channel. So there's a behavior change that's accelerated as a result of the pandemic, and the closures reflect that.

HORSLEY: But it's not just about consumer choice. Bank branches are expensive, so banks can save money by pushing customers online. Steven Jackson, who's a parish commissioner in Shreveport, La., worries that's turning parts of his city into banking deserts.

STEVEN JACKSON: A lot of banking institutions have utilized the pandemic to go ahead and justify downsizing even more. What we were seeing is, disproportionately, branches were being closed in communities of color.

HORSLEY: That could make it harder for small businesses in those neighborhoods to get a loan or cash to make change for their own customers. And when there's no convenient bank nearby, people often have to turn to more expensive options, like check cashing stores and payday lenders.

JACKSON: When you have young boys and girls riding by seeing empty buildings or that building which was once a bank is now turned over to a payday lender, what message are we sending? Is my neighborhood not a priority?

HORSLEY: Even though a lot of banking can be done online now, an FDIC survey found 83% of people still met with a teller or other bank employee at least once during 2019. That same year, more than 40% of rural customers made at least 10 visits to the bank. That's why, as banks close their doors, many communities have been looking to nonprofit credit unions and other alternatives to help fill the void. Darrin Williams, the CEO of Southern Bancorp, says he hears regularly from people in bank deserts who want him to open a branch. Half a dozen of the branches he operates are the only bank in town.

DARRIN WILLIAMS: In a lot of the rural communities we serve, the bank branch is part of the social fabric. So if you go to Trumann, Ark., on a payday Friday, there are going to be 10 people deep in the line.

HORSLEY: Moorhead, Miss., got lucky. When Regions Bank pulled out in 2015, Hope Credit Union came in. Mayor Holland says the credit union signed up more customers, offers more services and even added an ATM, something the old bank never did.

HOLLAND: I can't say enough about what that meant to us - to be able to bank right here in our town, to be able to have all of these resources right here in our town without having to travel.

HORSLEY: That kind of alternative will be increasingly important as more bank branches close. Otherwise, more communities will be singing the bank desert blues.

Scott Horsley, NPR News, Washington.

(SOUNDBITE OF BEN'S BAD BOYS' "YELLOW DOG BLUES") Transcript provided by NPR, Copyright NPR.

Corrected: March 25, 2021 at 10:00 PM MDT
Updates story to note that when Regions Bank closed its branch in Moorhead, Miss., the bank donated its building to Hope Credit Union's parent company and provided funding to facilitate a smooth transition.
Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.