Illinois-based Midland States Bancorp is to close or merge 20% of its branch network due to the ongoing shift to online banking, affecting 13 locations across the state.
It also plans to “renovate and upgrade” five branches to “reduce the size and better utilize those facilities to serve retail and commercial customers”.
Midland did not announce the locations affected by the changes.
In total, the plan is expected to result in approximately $13-15 million in “one-time costs”, the bank said. However, from 2022 it expected to save approximately $6 million a year as a result of the changes.
Jeffrey Ludwig, president and CEO of Midland States Bancorp, said: “The actions announced today reflect our ongoing efforts to evaluate all aspects of our operations for opportunities to enhance efficiencies.
“The ongoing COVID-19 pandemic has accelerated the shift towards digital banking and reduced the need for several of our smaller branches.
“Given the proximity of other branches, we believe that these adjustments to our branch network will have a minimal impact on our ability to provide customers with a convenient location to do their in-person banking.”
Ludwig added that the reduction in Midland’s branch network was aimed at achieving a “more consistent and predictable earnings stream” for the company.
Midland States Bank had total assets of $6.6 billion as of June 30, 2020, while its wealth management arm had assets under administration of approximately $3.3 billion.
The closures follow a similar decision by Five Star Bank in New York, which announced six branch closures in July following a sustained fall in customers using in-person services.
Pennsylvania-based Community Bank also announced plans to consolidate branches in Monessen, Pennsylvania, and Bethlehem, West Virginia, by the end of September.
However, Brian Brooks, acting head of the Office of the Comptroller of the Currency, has told banks that the regulator would not change the rules regarding branch closures because of the COVID-19 pandemic.
This is despite recent research that has shown the pandemic could change consumer behavior regarding how they interact with banks, with the use of branch-based services expected to fall.
Elsewhere, First National Bank in Maine is to buy a branch of Bangor Bank in Belfast, Maine, taking on $16.5 million in deposits and $23.5 million in loans.
The branch is one of six that Bangor is due to acquire through its planned merger with Damariscotta Bankshares. Bob Montgomery-Rice, president and CEO, said the sale should help the bank achieve the regulatory approvals necessary to complete the acquisition.
The three banks said they would work together “to ensure as seamless a transition as possible” for branch customers.