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Bloomberg
Aberdeen, Washington, is a far Northwest outpost of JPMorgan Chase & Co., with one lonely branch perched near the Pacific, 2,900 miles from Wall Street.
Now the bank is planning to depart the rainy timber town that gave the world Kurt Cobain. The next-closest Chase branch is 40 miles away.
At the same time, JPMorgan plans to open 70 branches in the vicinity of the other Washington — the wealthy national capital. Among the new locations is suburban McLean, Virginia, the 25th richest town in the US.
These two different communities are in fact part of the same story. For years the nation’s largest banks have been shrinking their vast branch networks. They’ve been cutting back faster in relatively poor neighborhoods than in more affluent ones.
Even with the spread of online banking, JPMorgan and its rivals have said storefronts remain a critical part of their growth. The banks say they’re committed to serving all their customers regardless of income, a requirement of the Community Reinvestment Act.
SMALL BUSINESSES
Yet, consumer advocates warn that the closings risk widening the wealth gap by leaving scores of low-income areas with less competition for services such as personal checking and small-business lending. A 2014 study by an MIT economist found that, even with other banks nearby, branch closures in low-income and minority neighborhoods made it harder for local businesses to get loans.
“Bank branches are a crucial part of financial access,†said Scott Astrada, a policy advocate at the Center for Responsible Lending. “The argument that we all live in this digital society so we don’t need bank branches is completely false.â€
No major bank exemplifies the industry trend of leaving lower-income areas better than JPMorgan.
NATIONAL EXPANSION
The biggest US bank announced plans a year ago to spend billions to open 400 branches and boost lending in a national expansion that would extend the lender’s profile to new states for the first time in a decade.
In the 13 months through January, JPMorgan has applied to open 185 new branches, with 71 percent of them in more affluent areas. The bank in that time has given notice to regulators of its intention to shut 187 branches. About half of those are in neighborhoods where household income is below the national median of $60,336, according to a Bloomberg analysis of regulatory and US Census data.
Anne Pace, a JPMorgan spokeswoman, said a national view of the data is skewed because it assumes that family income in all communities is the same. “In our footprint, Chase has significantly more branches and more deposits in low- to moderate-income neighborhoods than any other competitor,’’ Pace said in an emailed statement. “Even when we’ve consolidated branches, we continue to grow market share in those neighborhoods. In the vast majority of cases, the next closest branch is less than two miles away.’’
JPMorgan said it prefers a measure that excludes states where it doesn’t have a presence. By that measure, the firm had 26 percent of its branches in low- and moderate-income areas, while Wells Fargo & Co. and Bank of America Corp. each had 29 percent, according to data from JPMorgan. In response to questions from Bloomberg, JPMorgan said 30 percent of its new branches will be in such communities, up from an earlier pledge of at least 20 percent.
CONSUMER BANKS
Nationally, banks have shut 1,915 more branches in lower-income neighborhoods than they’ve opened in the four years through 2018, according to S&P Global Inc. The three largest consumer banks — JPMorgan, Wells Fargo and Bank of America — led the way, S&P said.