Bank branch closures a concern for lower-income neighborhoods

Fifth Third Bank and Chase Bank announced earlier this year they are closing more than 400 branches across the U.S. This follows a trend of banks closing West Dayton branches in the past five years.

The Standard Register Federal Credit Union on Campbell Street is the sole brick-and-mortar serving residents in the zip code 45417, which covers a majority of West Dayton, one of the city’s most densely populated.

According to a national survey by the Federal Deposit Insurance Corporation, 20 percent of U.S. household were underbanked in 2013, meaning they had a bank account but also used alternative financial services outside of the banking system. One in 13 households did not have a bank account at all.

The FDIC’s findings do not include numbers for Dayton, but they do show that 30.5 percent of households in the tri-state region are either unbanked or underbanked.

Since the PNC in Westown Plaza closed in 2013, many people living in West Dayton have had to seek alternative financial services.

“More than likely, they’re going to go to a payday lender or a Kroger or something like that — something with cash checking services — and they’re going to pay fees,” said Catherine Crosby, executive director of the Dayton Human Relations Council.

In a community with a median household income of $25,361, those fees are especially burdensome.

Dayton resident Terrence Jones relies on the RTA to get to and from wherever he needs to go — including the bank. “I really don’t know whether it’s worth keeping my money there or not,” he said.

Banks like Fifth Third Bank point to the changing demands from customers as why they have closed locations. At the beginning of 2014, nearly 75 percent of all Fifth Third’s consumer deposits were made in person at a branch. It’s now about 64 percent and dropping, as consumers more often use their mobile phones and ATM’s to deposit money.

Deposits made via mobile rose from 7.9 percent of total consumer deposits in January last year to 13.8 percent in March this year, said Larry Magnesen, spokesman for Cincinnati-based Fifth Third.

But Crosby said the closures have had a revolving door effect on local businesses, too. On the one hand, she said, bank departures often follow business closures — a sign that a community is ”struggling economically.” On the other, branch closures make it more difficult for remaining businesses to continue operations and new businesses to invest.

“When you think about a small business lending, you often have that ‘relationship banker’ in a community who knows the folks that walk in; that understands their circumstances; understands their needs,” Crosby said. “When you lose that, it has a stifling effect — because now you’re picking up the phone and calling somebody who knows nothing about you except whether the data supports somebody lending to you.”

The Loritts-Neilson Funeral Home on W. Third, owned by Ernest Neilson III for the last 23 years, is an example of one of west Dayton’s “mainstays.”

“Some of us have been fortunate enough to withstand the hard hits, some of the struggles,” Neilson said. “And I think you’re better for it in a sense because you appreciate the grind. You appreciate the hard work that it takes to be a mainstay.”

Neilson does his banking outside of the city, near his home, but said that having more options near the funeral home would be more convenient — not only for himself, but for his customers.

“Not too long ago, some of my businesses associates and I were trying to name the number of financial institutions right here in west Dayton,” Neilson said. “They are few and far between.”

Marcey Zwiebel, vice president and senior manager of Corporate Media Relations for The PNC Financial Services Group, said that branch consolidations during the last few years “are in response to our research, which shows that customers are banking very differently today, opting to use convenient mobile channels and ATMs to conduct their basic banking needs.”

He noted the company’s research also shows that low to moderate income customers use alternative banking options, such as online and mobile channels, to the same or greater extent as customers at other income levels.

Since the Westown branch closure, PNC has invested in Wright Dunbar Inc., Dayton’s NAACP branch, the Wesley Community Center, Southwest Priority Board, the Dayton Urban Ministry Center, and the Boys & Girls Club of Dayton.

But is it enough?

“We have to figure out a way to balance it,” Crosby said. “How does a bank make sure that their overhead costs are being covered and they’re not functioning at a loss but, at the same time, provide services to the community?”

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