The nation’s sixth-biggest bank, PNC, recently confirmed it would be closing 19 branches around the United States. This might not be that worrying if it weren’t for the fact that PNC closed 203 more branches earlier this year.
Most of the branches that are being closed are in Pennsylvania, although branches in Texas, New Jersey, Florida, Ohio, Indiana and Alabama will also be closing for good. Although the bank has said that the shift to digital banking is behind the move, many customers have expressed a preference for traditional banking methods, particularly older Americans.
Many bankers report that even the most tech-savvy clients still seek physical bank offices for interactions such as managing major transactions like significant loans, opening new accounts, or seeking financial advice. Moreover, having branches in high-traffic areas is an important part of marketing in some areas. Apparently, the need to cut costs as banks struggle financially outweighs these concerns.
PNC wasn’t the only American bank to announce branch closures recently; the same week, Citizens Bank announced it would be closing eight branches, while Bank of America closed five. (Bank of America, which is the second largest American bank, has announced it will close as many as 138 locations this year.)
Citibank closed two branches and U.S. Bank filed for seven branch closures. JPMorgan Chase announced 18 filings for closures, including branches in Ohio, South Carolina, Connecticut, New York and Florida. A number of smaller banks also closed single branches.
Taken together, banks filed to close 64 branches throughout the U.S. in the span of just one week, which is a troubling sign for the state of banking right now.
Making matters worse is the current situation of the real estate industry, with existing home sales dropping to alarmingly low levels. New home prices are also falling, registering a 17.6 percent drop from one year ago. Moreover, a joint report from the U.S. Census Bureau and the Department of Housing and Urban Development revealed that the sales of new construction homes dropped by 5.6 percent last month.
Axios recently reported that a rising proportion of homeowners have been selling their homes for less than they paid when they bought them, with some homeowners even racking up losses of six figures. In the period from August to October of this year, more than 3 percent of American homes were sold at a loss, a notable rise from the 2.4 percent registered a year ago.
Redfin indicates that the median loss on these transactions was roughly $40,000. San Francisco was especially hard hit, with one in seven homeowners there losing money when selling their home; the median loss in the city was more than $122,000.
Commercial real estate is not faring much better, with the volume of delinquent commercial mortgage-backed security loans rising by more than 49 percent between the beginning of the year and the end of October. This is mainly being attributed to office buildings, which saw a 261 percent rise in delinquency volumes during the same period. Office occupancy rates are dropping throughout the nation as people increasingly opt to work from home.
Unfortunately, the banking and real estate markets’ woes have historically preceded financial crises, and some financial experts believe we could well be headed in that direction right now.
Sources for this article include: