Changes in the retail banking landscape have resulted in more banking deserts throughout the U.S., including areas in Hampton Roads.
Defined as a census tract without a physical bank branch within a certain geographic radius from the population center, banking deserts exist where banks are more than 2 miles from an urban area, 5 miles for suburban and 10 miles for rural communities.
While the 2008 financial crisis led to bank closures and consolidations, the pace of branch closures accelerated during and since the COVID-19 pandemic. The total number of bank and credit union branches in the U.S. declined by 5.6% and the number of banking deserts increased by 217 between 2019 and 2023, according to a national report published by the Federal Reserve Bank of Philadelphia. The focus of the report is full-service, brick-and-mortar retail branches, including those of savings and loan associations, commercial banks and credit unions.
Hampton Roads experienced a 38% reduction, or a loss of 143 bank branches from 381 in 2008 to 238 branches in 2023, according to Federal Deposit Insurance Corp. market share reports. The region experienced a 22% reduction by 69 branches from 307 in 2019. These figures don’t include credit unions.
The branch closures coincide with the rise of digital banking, including mobile and online services, and the use of kiosks and ATMs. Long gone are the days when consumers had to walk inside banks for their transactions.
But banking deserts affect people who struggle with transportation, digital services, high-speed internet access and skills to navigate websites and apps, according to the report. It can also greatly impede consumers with lower incomes, disabilities or language barriers — who may still tend to favor in-person banking.
The Fed study shows that 5% of census tracts in Virginia last year were banking deserts and 3% may become a desert if a branch closes. Of those tracts, 80% are suburban and 46% have limited access to broadband.
In Hampton Roads, the Federal Reserve’s interactive dashboard map shows that the southern parts of Virginia Beach (including Blackwater, Sandbridge and part of Pungo), Chesapeake and Suffolk are all banking deserts with the nearest branches from 2 miles to 9 miles away. The region is considered a mix of urban and suburban.
A small urban tract in the Lee Hall section of Newport News, with a population of approximately 3,400, shows its nearest branch is 3 miles away. In Willoughby Spit and West Ocean View on the northern end of Norfolk and in the Lynnwood section of Virginia Beach, consumers have to travel between 2 to 3 miles for their banking needs.
Parts of Isle of Wight and Gloucester counties and the northern Outer Banks area of Corolla also fall within a banking desert. Hampton, Portsmouth, Poquoson, Williamsburg, James City County and York County show no banking deserts although Mathews County is marked as a potential desert, meaning the area is one branch closure away from becoming a desert.
Both larger banks and community-based banks reduced their physical presence in Hampton Roads over the past several years, according to closing notices with the Office of the Comptroller of the Currency and Federal Deposit Insurance Corp.
The merger of BB&T and SunTrust as Truist in late 2019 led to a major consolidation of branches in the region. Bank of America and Wells Fargo have closed multiple branches across Hampton Roads. Bank of America closed its Fort Eustis and Lynnhaven Square branches this year. Wells Fargo most recently closed its Richmond Road branch in Williamsburg in January and its Wells Fargo Center branch in November in downtown Norfolk, where it maintains an ATM.
Hampton-based Old Point National Bank has also closed multiple branches over the past several years and recently announced it will close its downtown Norfolk branch in September due to cost-cutting efforts.
Suffolk-based TowneBank’s acquisition of Windsor-based Farmers Bank also meant the closure of the Farmers branches in Pungo and Chesapeake last year as TowneBank operated locations nearby. TowneBank also closed its Harbour View branch at 6255 College Drive in Suffolk last year.
PNC Bank plans to close a standalone branch at 3012 Pacific Ave. in Virginia Beach on Oct. 18 in an ongoing effort to optimize its physical bank network, spokesperson Kelby Krauss said. Customers will be directed to the branch at 1324 N. Great Neck Road. PNC Bank has 10 branches, ATMs and video banking machines in Hampton Roads.
“Branch locations remain an essential aspect of how we connect with and support our clients and the local community,” Krauss said.
View the banking deserts dashboard at fedcommunities.org/data/banking-deserts-dashboard/.
Sandra J. Pennecke, 757-652-5836, sandra.pennecke@pilotonline.com
