Report: Large banks opened far fewer branches in minority areas since 2010

Closed bank branch

Large banks have been far more likely over the past decade to open branches in wealthier predominantly white neighborhoods than in communities of color, according to a new report.

The report, which examined trends at 14 of the largest U.S. banks between 2010 and 2021, found that they only opened 638 branches in low-to-moderate-income communities where people of color make up a majority.

That accounted for roughly 15% of the 4,130 total branches that large banks opened during the time period, a far smaller proportion than the 61% of branch openings in predominantly white, middle-to-upper-income neighborhoods.

Combined with disparities in branch closures, the findings highlight the need for bank regulators to use their tools "more forcefully" and ensure equitable access to branches, said Nick Weiner, the report's lead researcher and organizing lead at the Committee for Better Banks. The progressive group includes bank workers, consumer advocates and labor unions.

"Without more prodding and pressure, big banks will continue to overlook many, many communities that need access to financial services," Weiner said during a webinar outlining the findings.

The report comes as federal regulators work to finalize their proposed revamp of the Community Reinvestment Act, a 1977 law that looks to ensure banks are serving low- or moderate-income areas adequately. The report recommended that regulators should examine branch opening data when reviewing mergers and in CRA exams, and that banks disclose similar metrics to the public every year.

Wealthier neighborhoods made up primarily of people of color were not immune to disparities, with just 237 branch openings during the 11-year period, or 6% of all the branches opened. Upper-income areas where white people make up the majority saw 1,617 branch openings.

Branch opening disparities were the worst in Boston, Chicago, Dallas, Houston, New York City, San Diego and Seattle, the report said. Cities that fared better in the analysis included Atlanta, Cleveland, Minneapolis, Philadelphia, San Antonio and Washington, D.C.

The findings show "there is much work to be done for banks to live up to their promises to promote racial and socioeconomic equity," Paulina Gonzalez-Brito, executive director of the California Reinvestment Coalition, said in a news release.

Overall, the report found that low-and-moderate income areas and communities of color had a 15% chance that Bank of America would open a branch there compared to in a wealthy white neighborhood. That was lower than the 13 other banks the study looked at, including a 23% chance at JPMorgan Chase and 45% chance at Wells Fargo.

Bank of America spokesperson Andy Aldridge said the bank has an industry-leading 30% of branches in low-to-moderate-income neighborhoods and 36% in majority-minority communities. "Our financial center network is core to our business and we have a longstanding commitment to serving all our clients," Aldridge said.

Citibank, which has a far smaller retail footprint than the other Big 4 banks and only opened 62 total branches in the period, had a 17% chance of a opening a branch n a lower-income minority area.

"Citi is deeply committed to serving all communities and we closely follow census tract updates to best serve LMI communities," the company said in an emailed statement.

Capital One and Fifth Third Bank, meanwhile, were an exception. The two banks "stand out as having opened branches" in lower-income areas that are mostly made up of people of color at almost the same odds compared to wealthy white areas, the report said, though it added that wealthier communities of color saw disparities at both banks.

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Industry News Branch network CRA
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