Banks Shut Down 54 Local Branches

While we’ve touched on the health in the banking sector (or lack of it) in several previous articles, it may be time to take this discussion up a notch.  For business finance consultants and brokers, problems with banks and their ability to lend literally corresponds to exponential increases in on our earnings potential.  We know banks are in trouble.  The issue is, is that trouble already here?

High interest rates are causing chaos in real estate industry lending.  Current interest rates are exerting enormous pressure on the balance sheets of our largest financial institutions.  As a result, banks are being forced to get very tight with their money.  They simple are not making loans.  They are also closing down hundreds of branches and are laying off thousands of workers.  In fact, many now think we may be in early stages of the worst financial crisis since 2008 and 2009.

First Week of October:  Banks Shut Down 54 Local Branches

That’s right!  Major US banks are currently continuing close branches across the US.  Bank of America shuttered 21 branches in the first week of October alone, according to the Office of the Comptroller of the Currency (OCC).  This occurred October 2oth, leaving an increasing number of Americans without access to basic financial services.  Wells Fargo shuttered 15, while US Bank and Chase reported closing nine and three respectively.  In total, some 54 locations had either closed or were scheduled to close between October 1 and October 7.  That is just one week!

Worker Layoffs

According to a recent report from CNBC, the largest American banks have been quietly laying off workers all year.  And for many in the know, some of the deepest cuts are yet to come.  As a result of the impact of higher interest rates on the mortgage business and Wall Street deal-making failure due increases of funding costs, five of the largest U.S. banks have cut a combined 20,000 positions so far this year, according to company filings.

Bankruptcies and Home Foreclosures

At this point, it is obvious that the economy is not headed in the right direction.  During the early months of this year, the number of commercial Chapter 11 bankruptcies has been skyrocketing.  A wide array of U.S. businesses have struggled this year to the extent that in the first nine months of 2023, commercial Chapter 11 bankruptcies have soared 61% year over year to 4,553, according to Epiq Bankruptcy, which provides U.S. bankruptcy filing data.

Sales of previously owned homes dropped 2% in September from August to a seasonally adjusted, annualized rate of 3.96 million units, according to the National Association of Realtors. Sales were 15.4% lower compared with September 2022. This is the slowest sales pace since October 2010, during the Great Recession, when the market was in the midst of a foreclosure crisis.

And speaking of homes, are you aware that home foreclosures up 34 percent compared to the same time in 2022.  Home foreclosures are on the rise which is tied directly to Americans continue to grapple with the ongoing on going inflation and the cost-of-living crisis.  That foreclosure report is according to   data provider ATTOM, which found that foreclosure filings, which includes default notices, scheduled auctions and bank repossessions, surged 28% in the third quarter to 124,539.

Small Business Owners:  What Does That Mean for You?

The U.S. economy depends on small businesses, and small community banks play a key role in providing ready credit for such small firms. The U.S. Small Business Administration (SBA) defines a small business as a firm with fewer than 500 employees. Using this widely accepted measure, the SBA estimates that there are 33.2 million small businesses in the U.S. and that roughly half of all Americans in the labor force are employed by a small business or running one.  Small banks, often called community banks, are those with less than $10 billion in total assets.  A vast majority of the banks in the U.S. are community banks. and small businesses are more likely to confront the following financial and operational issues than their larger counterparts.

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