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Study: Poor communities take the brunt of bank closures

| Thursday, Aug. 1, 2013, 12:01 a.m.
Keith Hodan | Tribune-Review
Father Joachim Pantelis stands in front of the PNC Bank branch in Clairton, Tuesday, July 30, 2013. The Clairton branch, at which Father Pantelis is a customer, will be closing soon.

Joachim Pantelis soon won't be visiting his local PNC Bank branch in Clairton anymore. The only bank in this downtrodden town will close Aug. 16.

“I'm going to sorely miss this branch to do my banking,” said Pantelis, 72, a retired Greek Orthodox priest who has banked with PNC for about 20 years.

Major banks such as PNC close branches located in poorer areas such as Clairton much more often than in wealthier areas, leaving customers in the lurch, according to a recent study of branch closings and openings by the nation's 4,477 largest banks.

SNL Securities, a research firm in Charlottesville, Va., found that banks since 2006 opened a net 519 branches in neighborhoods with median household incomes of $100,000 or above.

By contrast, however, those banks closed a net 806 branches in neighborhoods with median household incomes of $50,000 or less, including 182 in neighborhoods under $25,000.

Median household income in Clairton is $35,989, according to census data.

“In a lot of these lower-income neighborhoods, when people lose their branch, they go to a currency exchange, a check casher or pay day lender, and they wind up with high-cost credit and a debt trap,” said Dory Rand, president of the Woodstock Institute, a fair lending advocacy group in Chicago.

“It's an example of how it's expensive to be poor,” Rand said. “We have millions of individuals in this country who are unbanked, and they are disproportionately people with less education, lower income and people of color.”

PNC spokeswoman Marcey Zwiebel said current Clairton customers are being directed to another branch in Elizabeth about 1.5 miles away. In addition, PNC is installing an automated teller machine inside a pharmacy less than one block from the branch.

“Every PNC branch closing that is planned in a low- or moderate-income community must pass through additional levels of review before completion,” Zwiebel said. That review is meant to “ensure that appropriate banking services will remain available in a community following a closure,” she said.

The SNL study put PNC and Citizens Bank, two of the biggest banks in Western Pennsylvania, among the top 10 in branch closures in lower-income neighborhoods.

PNC closed the third-most number of branches — a net 166 — in neighborhoods with less than $50,000 median household income between mid-2009 and June 2013. It closed a net five branches in higher-income neighborhoods.

Citizens Bank was seventh on the list in closings in lower-income areas — shutting down a net 66 branches in those communities out of 144 overall in the last four years.

“This data shows that the mix of communities we serve through branches has stayed almost exactly the same as we have shifted resources to online and mobile banking and other channels in response to customer preference,” said Citizens spokesman Jim Hughes.

PNC's Zwiebel declined to comment on the specific findings by SNL.

But Clairton truck driver Harvey McDougald did. He has banked for about 35 years at the local PNC branch, where he also obtained the mortgage on his house.

“PNC is just ditching us,” said McDougald, 58, who has one savings and two checking accounts at the branch. “There's a great possibility I'll switch to another bank.”

PNC added about 2,000 branches through bank acquisitions in the past five years, including 1,570 branches from acquiring National City Corp. in December 2008.

The National City deal left PNC with many overlapping branches in some markets, including Western Pennsylvania. As a result, PNC closed 15 branches in this region in 2009.

So far this year, PNC has closed 14 branches in Western Pennsylvania. They were part of the bank's plan to cut some 200 branches nationwide this year to reduce costs.

“As banks continue to cut costs, they evaluate options as to which branches to close,” said Tahir Ali, research analyst at SNL. “And income remains one of the criteria to decide whether to stay in a market and which branches to close.”

For folks like Pantelis, the closings are very inconvenient when they face trekking to a more-distant branch.

“I don't drive,” Pantelis said.“So, I'll have to catch a bus down to Route 51 and walk to the bank, then get on another bus to get back,” he said. “It'll take me an hour at least.”

Thomas Olson is a Trib Total Media staff writer. He can be reached at 412-320-7854 or at tolson@tribweb.com.

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