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#2088732 - 07/19/16 02:39 PM Branch Closure
clarkgriswald Offline
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I searched the forums and didn't see a thread directly addressing this question so thought it would be a good topic. I think a lot of banks are in a similar position to mine in that our retail footprint is shrinking. As part of that process the business line is constantly reviewing and analyzing branches to close. The business line uses objective metrics to measure the profitability, sales and services used at each branch location. As you may guess some of the branches that fail these tests and are being evaluated for closure are in majority minority and high minority areas. Obviously, from a CRA/Fair Lending perspective I would prefer not to close any of these branches, however the reality of the situation is that people aren't using them and they are not profitable. I'm curious how others approach this situation? What are the Fair Lending risks and what are the CRA risks? I'm trying to gather as much information as possible about the branches (mortgage originations/applications, proximity to next closest branch ect.) and be sure and document the objective criteria used in closing any branch. Anything else?

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#2088750 - 07/19/16 03:17 PM Re: Branch Closure clarkgriswald
RR Jen Offline
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I'm with you. I'm currently trying to support the decisions with the objective criteria. I'd be interested to see what others are doing as well.
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#2088751 - 07/19/16 03:18 PM Re: Branch Closure clarkgriswald
Kathleen O. Blanchard Offline

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Consider why people are not utilizing your branches. Is it something in the marketing? Are they made to feel welcome? What are the demographics of staff in those branches?

Those are also factors to be considered.

Finally, consider alternative methods available to serve people in those areas.
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#2088756 - 07/19/16 03:37 PM Re: Branch Closure clarkgriswald
clarkgriswald Offline
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Thanks Kathleen. My message is definitely tailored around making sure that even if the branch is closed having a defined plan regarding how we are going to serve that area. What types of "alternative methods" exist? We've talked about getting metrics of Online Banking and Mobile App usage. Anything else?

Does anyone know of any criteria regarding how many majority minority or high minority branches they should have? For example, if 10% of your open branches are in majority minority tracts is that sufficient? I know that answer is going to depend upon the area you operate and your AAs. I'm just wondering if others use any type of metrics to measure this type of information? Depending on how you measure you can make the numbers look anyway you want. For example, if you took the total number of majority minority tracts that exist in all of our AAs and divided that by the number of branches we have in majority minority tracts our numbers would look very different compared to just using our total number of branches divided by majority minority branches.

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#2088770 - 07/19/16 04:15 PM Re: Branch Closure clarkgriswald
kansas9839 Offline
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I have additional questions about that as well. Are there specific guidelines set for in the Q&As?

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#2088771 - 07/19/16 04:17 PM Re: Branch Closure kansas9839
Kathleen O. Blanchard Offline

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No there are not. The only "hints" are in fair lending cases.
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#2088773 - 07/19/16 04:23 PM Re: Branch Closure Kathleen O. Blanchard
kansas9839 Offline
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Thanks Kathleen. I am looking at some of those cases right now and seeing if there are any correlations I see. Once I do, I will post what I find.

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#2088794 - 07/19/16 05:30 PM Re: Branch Closure clarkgriswald
RR Jen Offline
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Originally Posted By clarkgriswald

Does anyone know of any criteria regarding how many majority minority or high minority branches they should have? For example, if 10% of your open branches are in majority minority tracts is that sufficient? I know that answer is going to depend upon the area you operate and your AAs. I'm just wondering if others use any type of metrics to measure this type of information? Depending on how you measure you can make the numbers look anyway you want. For example, if you took the total number of majority minority tracts that exist in all of our AAs and divided that by the number of branches we have in majority minority tracts our numbers would look very different compared to just using our total number of branches divided by majority minority branches.


I'm looking at this after the recent issue Bancorp South had, article pasted below. I've taken into consideration the State % minority, county % minority, and census tract % minority for all of our locations (ATMs, branches, and LPOs...not just our combined AA). Overall, we're lagging the state (we're in more rural areas) and national averages but ahead of the county. It did help identify a couple of counties that I want to keep on my radar.

https://www.consumerfinance.gov/about-us...rmed-consumers/
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#2088828 - 07/19/16 06:59 PM Re: Branch Closure RR Jen
kansas9839 Offline
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I found this link that was from 2014 giving some guidelines to prevent any redlining and bank closure issues.

https://www.trupointpartners.com/blog/cra-fair-lending-compliance-redlining-risk-management

I am not sure if these are accurate but I thought I would share.

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#2088937 - 07/20/16 02:39 PM Re: Branch Closure clarkgriswald
Pale Rider Offline
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under the Lone Star
You are guilty until proven innocent, and then you are still an evil, capitalistic bank!
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#2088962 - 07/20/16 03:52 PM Re: Branch Closure Pale Rider
Peach Offline
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Originally Posted By Pale Rider
You are guilty until proven innocent, and then you are still an evil, capitalistic bank!
You typed exactly what I was thinking.

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#2089250 - 07/21/16 06:24 PM Re: Branch Closure Kathleen O. Blanchard
kansas9839 Offline
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That is what I found out after doing my analysis of several different banks that we are using as examples to give to our branches in the area. It looks like assessment areas can change based upon 2000 or 2010 data. I did have a general question. Has there been any sort of mapping done comparing the use of tax credits, with lending and branches? Meaning, if there is any section 8, historic preservation, enterprise zones in the area, how does that look with lending to minorities and the number of branches in high majority minority areas?

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#2089270 - 07/21/16 06:59 PM Re: Branch Closure clarkgriswald
Kathleen O. Blanchard Offline

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Yes, there were major changes from 2000 to 2010.

Do you mean any industry comparisons or mapping that is available for banks to reference? I am not aware of any source that simply has information of that type freely available.
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The HMDA Academy
www.kaybeescomplianceinsights.com

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#2089302 - 07/21/16 08:02 PM Re: Branch Closure Kathleen O. Blanchard
kansas9839 Offline
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I was just thinking out loud. I did have a question. Based on all my analysis of these banks that the Fed sent consent orders to, it seems like they were penalized for not having branches in majority minority areas. Does a bank need a branch a majority minority area or is it okay if they have a branch in a certain radius (How many miles?) If that branch is not in the area but they still provide loans to a majority minority area, does that mean they are meeting the needs of that area? Say that a census tract has 12% of majority minority people. If a bank provides 8% of loans to minorities in that area, do they meet the needs of the community? Or do they need to meet the 12%? What is a threshold that the fed uses? I am sure that other banks are dealing with branch closures. How do we as a bank make sure that we don't get thrown into the others that get accused of redlining?

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#2089306 - 07/21/16 08:04 PM Re: Branch Closure Kathleen O. Blanchard
kansas9839 Offline
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More industry comparisons. When the Fed does an exam, are we compared to others or is it an industry standard?

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#2089332 - 07/21/16 08:43 PM Re: Branch Closure clarkgriswald
Kathleen O. Blanchard Offline

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One possible comparison would be other banks with branches in those areas that are successful. The question/comparison would be why are they successful and you are not...why are they getting deposits, making loans, etc. yet your bank says it cannot make it work in that area.
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HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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#2089385 - 07/22/16 12:28 PM Re: Branch Closure Kathleen O. Blanchard
kansas9839 Offline
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Do branches need to be in the area or can they be out of the area but still be providing services to minority majority areas? I appreciate all the feedback Kathleen. I have definitely learned a lot in the last three months since starting here. Without your feedback, I would be in the dark on a lot of this.

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#2089509 - 07/22/16 05:50 PM Re: Branch Closure clarkgriswald
kansas9839 Offline
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Another question. When in majority minority areas, does it specifically have to target Hispanic and African Americans or is it all minorities? There was the case of Hudson City Bank and they were giving loans to Koreans, Chinese, and Indian Americans but they were accused of redlining. Is there a reason why?

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#2098324 - 09/13/16 08:35 PM Re: Branch Closure clarkgriswald
InFairness, CRCM Offline
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USA
In general, the goal is for branch distribution to mirror population distribution. Regulators may look at all minority tracts, or they may target communities of certain minorities that the bank might be underserving.
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