Truist opened fewer branches post-merger in diverse areas, advocacy group claims

After SunTrust and BB&T combined to form Truist in late 2019, the bank opened fewer branches in low-income and diverse neighborhoods than before the merger, according to a report from the Committee for Better Banks.

The decrease in openings is one example of how a big bank’s shifting branch strategy can negatively impact communities already struggling with access to capital and other financial services, the worker advocacy group said in its report.

Truist has made significant changes to its branch network as it prepares for a complete conversion to its new name and branding next month.

In response to questions about the committee’s report, Truist told the Observer that it has taken multiple steps to lend and invest in low- to moderate-income and minority communities since the merger was finalized. The bank also said it has ensured that no merger-related branch closures occurred in low- and moderate-income neighborhoods.

Following the completion of the full switchover to the Truist name and branding planned for next month, the proportion of Truist branches in low- to moderate-income neighborhoods will be higher that that of either BB&T or SunTrust, the bank said.

“Truist is guided by our purpose to inspire and build better lives and communities. We’re proud of our community development efforts,” the bank said in its recent statement.

“There’s been a lot of attention to where banks close branches but little to where they open branches,” Nick Weiner, co-lead director for the committee, said in a recent interview. “After (SunTrust and BB&T) merged, there was a shift.”

The committee describes itself as a coalition of bank workers, community and consumer advocacy groups, and labor organizations, that work to improve conditions in the banking industry. It also has worked to unionize workers at certain banks.

Weiner called the report a “case study” of the potential impact on some communities from consolidation in the banking industry, and as the country’s larger banks move to shrink their branch networks.

“Where they (open branches) has an impact,” Weiner said. “If there’s a shift away from low income and communities of color... there’s a real cost to these communities.”

Truist closings and consolidation

Truist is closing many more branches than it is opening.

The Charlotte-based bank plans to close some 800 branches by the end of the first quarter of this year, part of its post-merger initiative to cut expenses and address overlaps in its branch network, which spreads throughout the Southeast.

The advocay group’s report, published in the fall, evaluated branch opening data from Jan. 1, 2010 through March 31, 2021. It found that Truist opened 36 branches from Jan. 1, 2020, through early last year, citing data from the U.S. Census Bureau and the Federal Deposit Insurance Corp.

During that time, Truist opened six branches in diverse, low- to moderate-income census tracts around the U.S., the report stated. That’s less than a quarter of the openings that occurred in higher-income, predominantly white areas, the report said.

Compared to pre-merger openings at SunTrust and BB&T, the six branches also represent a 35% drop in new locations in low- to moderate-income minority communities and a 50% decrease in openings in minority communities regardless of income.

By contrast, 25 branch openings occurred in higher-income, predominantly white areas, and one was in a diverse, middle- to upper-income tract. The report did not cite specific locations for any of the branches.

“We saw a significant shift pre- and post merger on where they were opening new branches,” Weiner said.

Prior to the merger, FDIC data show that SunTrust and BB&T opened new branches in roughly the same numbers in low to moderate income and majority-minority areas as it did in higher-income, predominantly white areas, the report stated.

At a 2019 congressional hearing on the merger, former SunTrust leader and current Truist CEO Bill Rogers told the panel that the bank’s focus “will be on communities. Our focus will not be to abandon communities. We have committed to keep branches in rural markets. We have committed to open branches in (low-moderate income) markets, because we will only be as strong as our communities.”

He also told the U.S. House Committee on Financial Services that the bank would open at least 15 branches in low- to moderate-income communities as part of the deal.

The Committee for Better Banks said its research showed that Truist hadn’t yet made good on that promise, Weiner said.

In its statement to the Observer, Truist said it was on track to meet that goal by the end of this year, including one in Charlotte on the Freedom Drive and Wilkinson Boulevard corridor.

Truist is also ahead of schedule on its Community Benefits Plan, the bank said, which involves lending or investing $60 billion in low-moderate income and minority communities from 2020 through 2022.

Weiner said he’d still like to see those types of investments incorporated into branch openings. “Where do they see the future? (That’s) where they’re opening new branches, that’s where they’re putting money,” he said.

Cutting costs, closing branches

Truist isn’t the only bank that’s reevaluating its branch network.

Many of the country’s larger banks are shrinking their number of branches, especially after the COVID pandemic spurred even more customers to adopt digital banking.

Wells Fargo has worked to close hundreds of locations, part of company-wide efforts to cut costs.

And Charlotte-based Bank of America is making similar efforts, part of a pre-pandemic plan to optimize its branch network, most recently filing with regulators to close a location on Carmel Road in Charlotte.

“There’s not really a sense of when banks are going to stop closing branches,” said Jason Richardson, director of research at the National Community Reinvestment Coalition. “How many bank branches do you really need, if you’re a mid-range regional bank with 80 branches right now, and three quarters of your consumers are working online anyway? It’s a question.”

Physical locations remain an important way for some customers to access financial services, Richardson said. He’ll be monitoring the impact of branch changes at Truist and other banks to see if the pandemic impacted closures or openings.

Weiner said the CBB report shows how big banks’ business decisions might inadvertently affect some communities, especially those already at a disadvantage.

“It’s like a warning sign,” he said. “We need to have more safeguards in place.”