I love going to my local bank branch to do my banking. Even though I’m on my smartphone or computer nearly all day long, I do very little online or mobile banking except for the occasional check of a balance. I happen to enjoy making small talk with the teller, conducting my transaction, and leaving with a peppermint. I feel fortunate to be within walking distance of my neighborhood branch, but it almost didn’t happen.

Back in the summer of 2009, I walked into the Bank of America branch in the Boonsboro Shopping Center in Lynchburg to inquire about opening a business account, but the representative I spoke with said he really didn’t think that it was a good fit and recommended that I go to one of the other banks in the neighborhood. I was a bit puzzled and not sure why a bank wouldn’t want new business, but I shrugged it off and went to another nearby bank that I am happy with to this day. It all made sense a month later when Bank of America publicly announced that they were closing the Boonsboro branch. The guy that had sent me away just a few weeks early had actually done me a big favor, because who would knowingly choose a bank without any locations convenient to where you live and work?

As the total number of branch locations nationally continues to decline from its 2009 peak, more people around the country are facing the possibility of losing their convenient neighborhood bank branch. Similar to national trends, the number of bank locations, not including credit unions, in the Lynchburg MSA peaked at 99 in 2009 and is currently at 92 locations, according to the most recent FDIC data from June 2016. While a few local banks added locations during this period, seven of the location closures since the peak were by banks not headquartered in Virginia. According to the FDIC, the five banks with the most offices in the Lynchburg MSA are Wells Fargo Bank and BB&T (16 offices each), Bank of the James (10 offices), Carter Bank & Trust (9 offices), and First National Bank (8 offices). Quick Tip: If you love data, head over to FDIC.gov to explore bank statistics on market share and deposit totals that are searchable all the way down to the individual branch location.

In the last few years, we have seen the following bank real estate activity locally:
• Bank of America still has three Lynchburg-area branches, but it has largely been pulling out of rural and secondary markets in our region as evidenced by the 2014 sale of ten branches, including locations in the Roanoke Valley, Danville, and Martinsville, to HomeTrust Bank; the 2014 sale of six branches in Southwest Virginia to First Community Bank; and the 2015 sale of six branches, including one in Farmville, to Strasburg-based First Bank.

• Essex Bank will have its first branch location in the Lynchburg area after purchasing a 1,836-square-foot former BB&T branch at the corner of Timberlake Road and Waterlick Road for $675,000 in December 2016.

• First National Bank of Altavista bought a 1.512-acre site on Old Forest Road for $450,000 in 2015 and built a new 3,736-square-foot branch. Their former Old Forest Road branch located a few doors down was sold for $480,000 in 2016 and became the new Dunkin’ Donuts. In addition to renovating their Timberlake Road branch, First National is also building a four-story Lynchburg headquarters on a 1.75-acre site on Odd Fellows Road.

• Credit Union Activity: In September 2016, Central Virginia Federal Credit Union purchased a 0.717-acre site opposite the new First National Bank branch on Old Forest Road for $403,000. Blue Eagle Credit Union purchased a 0.121-acre site in the Cornerstone development for $445,000 in 2015 and constructed a 3,180-square-foot branch, which marked their first Lynchburg location. Member One Federal Credit Union has opened new inline storefront locations in both the Fresh Market retail center and the new strip center on Route 221.

• The merger of Union First Market and StellarOne created redundancies in certain markets that led to some branch closures and sales. For example, Bank of the James purchased an old StellarOne branch in Harrisonburg in 2015. Bank of the James also purchased an old SunTrust bank in downtown Lexington in 2016 and opened their first Charlottesville branch in the new Wegmans-anchored retail center.

As banks attempt to determine the optimal amount of brick and mortar footprint, their evaluation of existing locations and commitments must balance a desire to cut costs with the need to maintain a compelling and convenient location map for customers. As banks relocate or build new, they are often opting for a leaner, more efficient footprint for their new locations rather than the large branches of the past that required more staff and had higher operating costs. As there is little to no inventory of available branch bank properties in our area, a bank wanting to enter our market or expand has very few opportunities to buy a modern branch, which makes land acquisition and new construction as the most likely path for a new branch location.

But no matter whether the branch is old and big or new and small, the highest transaction cost for a bank by far is still for in-person service at a branch location. For this reason, some banks are choosing to fill gaps on the map with standalone ATM-only locations, which are convenient for customers and cheaper to roll out. Banks are also attempting to push more traffic to their online websites and mobile applications, which represent the most cost-effective transaction for the bank. However, given that many customers still have a strong preference for face-to-face interactions when conducting certain high value transactions, such as opening an account or going to see about a loan, branch banks aren’t going away any time soon.

By Billy Hansen