Brick-and-mortar banks have been disappearing in the U.S. for years, but during the Covid-19 pandemic, banks have been doubling the rate of branch closures, new data from the National Community Reinvestment Coalition (NCRC) shows.

And Baltimore’s branch closure rate, the group reports, is nearly the worst in the nation, with the Baltimore metropolitan area losing 14% of its bank branches between 2017 and 2021.

Only the Portland, Oregon, metropolitan area experienced a higher rate of closures, with nearly 20% of its bank branches shuttered during that five-year period.

Hartford, Connecticut, tied Baltimore with a 14% loss.

Even with the industry’s overall move online, the report’s authors say that storefront banks remain a vital financial services lifeline for many.

“Small businesses still depend on in-person banking services despite the proliferation of online alternatives,” they wrote in “The Great Consolidation of Banks and Acceleration of Branch Closures Across America,” released today.

“And the shrinking of branch networks threatens local economic activity that is key to wealth-building in marginalized communities,” they noted.

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“In communities that have historically faced higher barriers to banking services and struggled to build wealth, the personal relationship between local business owners and bankers in local branches can be essential to securing credit or renegotiating loan terms,” said Jason Richardson, NCRC’s senior director of research and one of the study authors.

Consolidation and Covid

Mergers and acquisitions have driven most most branch closures, along with the shift to internet-based transactions.

According to the report, two-thirds of banking institutions have disappeared since the early 1980s, declining from nearly 18,000 in 1984 to fewer than 5,000 in 2021.

Between 2017 and 2021, 9% of all branch locations in the U.S. closed, representing a loss of about 7,500 brick-and-mortar locations.

The pandemic dramatically accelerated the trend, the authors discovered.

Banks have closed more than 4,000 branches since March 2020. This doubled the rate of closures during the 10 years prior to the pandemic.

“Under-banked”

As for the impact of this trend, it falls hardest, not surprisingly, on minorities and the less affluent.

One-third of the branches closed from 2017 to 2021 were in a low- to moderate-income and/or a minority neighborhood, where access to branches is crucial to ending inequities in access to financial services, the report said.

Without branches nearby, people are more likely to be “un-banked” or “under-banked.”

And that means turning to alternative financial providers that step in to fill the void — unregulated actors such as payday lenders, auto loan title lenders or check-cashing locations that charge exorbitant fees.