Borrowers that plan to visit their local bank branch to obtain a mortgage application may find themselves facing limited choices. According to a report authored by Meredith Whitney, a former Oppenheimer & Co. analyst who now runs her own consulting group, the U.S. will lose approximately 5,000 bank branches in the next 18 months and up to 10,000 branches by 2015.
In a new report titled ‘Bank Profits In Structural Decline Will Result in 5,000 Branches Closing Over Next 18 Months,’ Whitney warns that declining profits from decreased loan demand and lower fee revenue will result in the shuttering of branch offices. Whitney adds that this will accelerate the trend that has already seen the closure of bank branches due to the unstable economy and the failure of many banks.
Furthermore, Whitney warns that the number of U.S. households without access to a local bank branch will rise to 41 million by 2015 – the most recent figure on this issue, she notes, is 30 million from a 2009 survey.
In her report, Whitney states that the Dodd-Frank Act will further complicate this situation.
‘We believe the greatest unintended consequence of regulatory reform, post credit crisis, will be the banks' ability to price for risk,’ she says. ‘Owing to an inability to price for certain risk, we believe the banking industry will simply no longer be able to service upwards of 10% of their current customer base.’
SOURCE: Meredith Whitney Advisory Group