2012 Will See 21 Associated Bank Branches Close
The revenue loss felt by banks as a result of new debit card swipe fee regulations is hurting the bottom line for many lending institutions. Associated Bank, whose primary territory is Wisconsin, Illinois and Minnesota, is responding to such losses by announcing the close of 21 branches come 2012.
Associated Bank has announced that 21 of their branches will be closing down in the early part of 2012 in the three-state area of Illinois, Wisconsin and Minnesota. The majority of locations selected to close are within 2 miles of another Associated branch.
“As part of our strategy, we continuously evaluate our operations to ensure we are investing our resources in a manner that allows us to achieve optimal returns,” said Associated in a press release.
The lender did not indicate how many jobs would be lost as a result of the branch shut downs, but all affected employees have apparently already been notified and, according to Associated’s president and chief executive Philip B. Flynn, “a very significant number” of those employees will have an opportunity to find another job elsewhere within the company.
The Federal Deposit Insurance Corp. released data which showed Associated as having over 4,550 full-time employees as of September 30, 2011.
Associated reported a net gain of $34 million during the third quarter of 2011, which marked its fifth profitable quarter in a row. Throughout the first nine months of the year, Associated had a net income of $75 million.
Despite being profitable, Associated is one of many banks struggling to offset the revenue losses caused by new federal rules that capped debit card interchange fees. It has been estimated that the new law will cost Associated nearly $19 million a year.
Flynn said that the high number of banks currently focusing on cutting back their expenditures is due to the combination of a tougher regulatory environment plus the sluggish economy and low interest rates which makes it very challenging to increase earnings.
“So we’ve got to take a hard look at managing the expenses,” Flynn said, according to The Wisconsin State Journal. “The 21 branches we’ve decided to consolidate are, on average, within two miles of another Associated branch. I think the farthest one is 31/2 miles. One should certainly not draw the conclusion that we are abandoning markets. By no means are we doing that. But we are trying to become more efficient.”