Banks are opening more branches in an effort to generate more revenue, and they are opening offices at a rate faster than population growth, a move that could lead to another cycle of closings.
The $159-billion SunTrust Banks Inc. plans to add 60 to 80 new branches this year, mainly in Wal-Mart stores in Georgia and Florida, according to The American Banker, an affiliate of The Credit Union Journal. The bank opened 54 branches last year.
SunTrust is rate of branch openings is just 4.8%. Washington Mutual has a 12.9% expansion rate with plans to add 250 more branches this year and JPM Chase has a 6% rate with plans to add 150 branches.
Federal Deposit Insurance Corp. data show that the number of bank offices rose 15% between 1994 and 2004 to about 90,000. The number of banks fell 29% to about 9,000 in the same period.
"You're going to see a new branch opening every three hours between now and the end of 2005, but the population is not growing that fast. So, to get deposits, you're going to have to take them from somebody else," Richard X. Bove, an analyst at Punk, Ziegel & Co., told The American Banker.
