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#2088732 - 07/19/16 02:39 PM
Branch Closure
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Member
Joined: Oct 2014
Posts: 51
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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
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Power Poster
Joined: May 2003
Posts: 3,760
Running and riding everywhere ...
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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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I don't need any more negativity in my life...be positive and helpful people or I will kick you in the shins!!!
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#2088756 - 07/19/16 03:37 PM
Re: Branch Closure
clarkgriswald
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Member
Joined: Oct 2014
Posts: 51
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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
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Junior Member
Joined: May 2016
Posts: 43
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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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#2088773 - 07/19/16 04:23 PM
Re: Branch Closure
Kathleen O. Blanchard
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Junior Member
Joined: May 2016
Posts: 43
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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
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Power Poster
Joined: May 2003
Posts: 3,760
Running and riding everywhere ...
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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/
_________________________
I don't need any more negativity in my life...be positive and helpful people or I will kick you in the shins!!!
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#2088937 - 07/20/16 02:39 PM
Re: Branch Closure
clarkgriswald
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10K Club
Joined: Aug 2002
Posts: 34,318
under the Lone Star
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You are guilty until proven innocent, and then you are still an evil, capitalistic bank!
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Societies that do not find work in and of itself "pleasing to God and requisite to Man," tend to be highly corrupt.
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#2088962 - 07/20/16 03:52 PM
Re: Branch Closure
Pale Rider
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100 Club
Joined: Sep 2006
Posts: 179
Out West
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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
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Junior Member
Joined: May 2016
Posts: 43
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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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#2089302 - 07/21/16 08:02 PM
Re: Branch Closure
Kathleen O. Blanchard
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Junior Member
Joined: May 2016
Posts: 43
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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
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Junior Member
Joined: May 2016
Posts: 43
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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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#2089385 - 07/22/16 12:28 PM
Re: Branch Closure
Kathleen O. Blanchard
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Junior Member
Joined: May 2016
Posts: 43
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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
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Junior Member
Joined: May 2016
Posts: 43
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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
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Platinum Poster
Joined: Nov 2010
Posts: 919
USA
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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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Opinions are strictly my own, and have nothing to do with my employer.
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