Neighborhoods Lose When Branches Quietly Close Doors

Banks do not close branches. They consolidate them.

The tellers are gone and the doors are barred. But bankers do verbal cartwheels to avoid the word “closing.” A branch is “consolidated” with a nearby, or not-so-nearby, facility in the name of better customer service.

But banks find it hard sometimes to explain the benefits of consolidation to residents of a low-income neighborhood whose only remaining financial institution may be a check-cashing office staked out by local gang members.

“It seems as though poor neighborhoods are the hardest hit by bank closures, without any regard to the concerns of the people in that area,” said Gene Hale, chairman of the Black Business Assn., a nonprofit organization in Los Angeles trying to improve economic conditions in minority communities.

The banks say closings are based on profits and proximity to other locations that can pick up the accounts. They point out that closings affect rich areas as well as poor ones.

That is usually all banks want to say on the subject. They rarely issue press releases on closings. Even when the news leaks out, they refuse to provide a list of the affected sites.

Security Pacific National Bank of Los Angeles has closed 50 branches so far in 1988. But a spokeswoman said no one was willing to discuss any aspect of the closings.

Questions about the disposition of closed branches were turned away at San Francisco’s Wells Fargo Bank, which has shut nearly 300 branches in the past six years, in part as a result of its acquisition of Crocker National Bank. A spokeswoman later provided numbers on closings and responded to specific questions.

Banks prefer that branch closings be like the proverbial tree that falls in the forest when no one is around: It’s down, but nobody heard the noise.

Not all branches go silently, however, particularly if a community finds itself without an alternative bank.

When Bank of America announced the demise of a branch it had operated for nearly 40 years at 3420 S. Central Ave. in Los Angeles in June, representatives of neighborhood businesses organized a protest. They urged patrons to ask bank officials to keep the branch open, and they invited news reporters and television cameras to watch.

B of A, which has shrunk from 1,100 branches in 1983 to about 880, was unswayed. The branch closed as scheduled, and customer accounts were transferred to a bigger branch two miles away.

Protesters in San Francisco recently won a stay of execution for a Wells Fargo branch in the the low-income neighborhood of Hunter’s Point-Bay View. Wells Fargo intended to close the branch in early July but postponed it after a community rally and letters from various politicians and community group leaders.

A spokeswoman said the extension was to give residents time to find another institution and the branch will close Sept. 30. Wells Fargo’s nearest branch is three miles away, but the spokeswoman said B of A and a savings and loan maintain branches in the neighborhood.

Most analysts say about $20 million in deposits is required to operate a branch profitably. The squeeze on bank profits these days means most can no longer afford the luxury of money-losing branches.

So it was no surprise when B of A recently closed its branch in well-to-do Carmel Valley in Northern California, where deposits were an anemic $11 million.

But the B of A branch at 3420 S. Central Ave. had maintained $31 million in deposits over several years, so it should have been profitable. A spokesman said, however, that the location of a larger branch two miles away made the closing cost efficient.

Closing a branch inconveniences customers, whether they live in rich neighborhoods or poor ones. But the effect on a struggling community can be more damaging.

“A branch closing has a very negative financial impact on the total community,” said John C. Gamboa, executive director of the Latino Issues Forum in San Francisco. “People don’t want to invest there or move there. A bank is real solid evidence to the neighborhood of some economic viability.”