Why do banks lease properties when it is useless to them?
I’m searching for STNLs and I just wonder ; why are banks leasing properties? It seems like a lot of money for them to spend on something that can be done completely online. It feels like a lot of money spent on property with not much gain. I also wonder what metric they go by when shutting a branch down.
[{"id": "i4znldv", "text": "I've seen a lot of listings of vacant bank branches.", "replies": [{"id": "i4znr7t", "text": "That\u2019d make sense as downscaling and switching to online would save them some cash but I also saw this listing that shows a new 20 year lease from chase bank. Idk why they\u2019d ever do that", "replies": [{"id": "i4zouc6", "text": "Chase is a publicly traded company. You can read through their annual/quarterly filings with their financials to understand their business and their strategy.", "replies": [], "depth": 3}, {"id": "i4zp44x", "text": "Chase is opening branches left and right where I live.  Also, while a lot of personal banking can be done online and at ATMs, retail businesses need bank branches to get change etc.", "replies": [{"id": "i504kci", "text": "True for now, but technology to go cashless + a big shift of that during Covid mania, makes me wonder if these locations will be very much obsolete in a decade.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "i4zprzl", "text": "Some business is still done in person, but the real reason is that physical banks main purpose is to bring in new customers. They are essentially sales offices where you can also cash a check, if need be.", "replies": [{"id": "i50dvl8", "text": "Agree.  and fees as others suggest below.  Mainly if they have good loans on the books they can easily afford to lease these locations.  Recently tried to refi early on a 7 year term with my bank.  They would not agree (without charging fees).  Banker sent me figures on how much they would lose by refi me early, yearly interest on my loan (1.4) and I remember thinking with one year of just this relatively small loan bank could easily pay half their rent for the year on say a 5000 sf suite.", "replies": [], "depth": 2}], "depth": 1}, {"id": "i4zw142", "text": "We\u2019re building several new BOA branches all over the Midwest. Some with drive-thrus and some without. Smaller footprint too.", "replies": [], "depth": 1}, {"id": "i4zxbjx", "text": "It is a question. When I worked for Sun Trust about 20 years ago they knew the exact amount of money it cost for a customer to walk in the door. I would think those costs had gone up significantly over the years with less foot traffic. \n\nI was in the drive through yesterday for my Dad to deposit checks and I heard the guys in the lane next to me cashing their checks for cash. There was like three of them in the truck. I suspect there are a lot of people like that who still live in the cash world and need a bank to cash the pay check without a lot of fees.", "replies": [], "depth": 1}, {"id": "i4zxer7", "text": "Because it's not worthless to them.", "replies": [], "depth": 1}, {"id": "i502noz", "text": "Go visit a branch on Friday. So many people still withdraw cash. Deposit checks (above monthly online limits). There is still a huge cash based population. \n\nHispanic and blue collar people. Just because they are not your people doesn\u2019t mean they aren\u2019t a good reason.", "replies": [], "depth": 1}, {"id": "i5048la", "text": "Yeah weird how no one until now ever thought of that", "replies": [], "depth": 1}, {"id": "i50dv9b", "text": "I am executor for my dad's estate. He had a checking account in Florida and a trust checking account in New York.  I figured, no problem I'll simply update and use those banks.... Nope. Complete fail for both of them.  I need a local bank I can walk into.  Wait times in the phone are stupid long.  No personal connection, so everything online is like starting over everytime I need something.  I had to deposit some checks in the Florida account and the bank could not get it working for me online because it was an estate account.  Mailed the checks and 3 weeks later they were returned undeliverable.  Wtf.  I'm a digital native, but these banks were both lame online.  I find online preferable until there is a special need, then online sux.", "replies": [], "depth": 1}, {"id": "i50frg7", "text": "I have many leases with national banks, and it seems like lately they\u2019ve been opening branches instead of closing branches. I\u2019m currently negotiating new leases with both the #1 and #2 largest banks, and I can\u2019t remember the last time I did a new bank lease (I know that\u2019s anecdotal). \n\nThe answer to your question about metrics is usually deposits. Every branch that has closed upon lease expiration with me has been due to consolidating low-deposit branches. You can check every branch\u2019s reported deposits through the FDIC, and it will give you a gauge of how your branch lines up with others in your market. \n\nThe second metric I\u2019ve seen them use to evaluate a branch is transactions. For example, I have a lease with the #2 bank for a free-standing location that has relatively low deposits; however, it does huge daily transactions (the three-lane drive-thru always has multiple lines like a CFA). The bank keeps that branch open to serve all those customers who are making traditional deposits.", "replies": [{"id": "i50g6il", "text": "Thank you so much for the answer! Is there a specific link or website to check deposits through the FDIC?", "replies": [], "depth": 2}, {"id": "i510w8y", "text": "The FDIC\u2019s website. You\u2019d be surprised how much info is there.", "replies": [], "depth": 2}], "depth": 1}, {"id": "i51c69j", "text": "There are Community Reinvestment Act metrics that banks can't meet without having branches (providing services) in certain locations (zip codes).", "replies": [], "depth": 1}, {"id": "i51eqq8", "text": "the bank I work at lent money on the building we lease.", "replies": [], "depth": 1}, {"id": "i544y70", "text": "And they have been expanding over the last decade as well.  It makes zero sense.  The only real service provided by a bank is the ability to withdraw significant cash but I don't even pay for that.\n\nAnd they charge ultra high fees to do anything meanwhile discount brokerages give free ATM withdrawals free checks free trades easy mail in deposits, etc.", "replies": [], "depth": 1}, {"id": "i54kint", "text": "I can\u2019t speak for others, but I\u2019ve got millions in loans to banks, and there\u2019s no way I\u2019d have those loans without a personal relationship and a branch to walk into.", "replies": [], "depth": 1}, {"id": "i55wu8t", "text": "A physical presence is worth the rent in advertising alone.  Having a visible presence in a community builds consumer trust.   Think about a teenager that has to pass a certain bank on his way to school everyday, when s/he gets a job and needs a bank account, s/he is very likely to open an account at the bank they have been passing every day. \nThe physical presence is the the marketing for future business since they will not advertise on media channels that younger people visit daily.", "replies": [], "depth": 1}, {"id": "i5bthlw", "text": "Many people still utilize banks with physical customer locations. I keep one account at a bank with physical locations since it allows me to cash checks and get large amounts of cash out in specific denominations. It is also difficult to build personal relationships with banks and other lending institutions if you do not see each other face to face.", "replies": [], "depth": 1}, {"id": "i78nzop", "text": "For the write off. They don\u2019t have one more branch then they need.", "replies": [], "depth": 1}]