Community Resiliency of Bank Branch Networks

This is a look at the resiliency of bank branch networks for holding companies with $1 billion or more in deposits. The Community Resiliency Estimate provided by the US Census department is defined as:

Community resilience is the capacity of individuals and households to absorb, endure, and recover from the health, social, and economic impacts of a disaster such as a hurricane or pandemic.  When disasters occur, recovery depends on the community’s ability to withstand the effects of the event. In order to facilitate disaster preparedness, the Census Bureau has developed new small area estimates, identifying communities where resources and information may effectively mitigate the impact of disasters. 

Using the Census Resilience estimates by county and tract, along with the Statement of Deposits for branch data from the FDIC, a deposit weighted score was calculated for each branch as the product of the branch deposits and the resiliency score for the county in which the branch is located. Next, the branch scores were normalized for the bank. Finally, a score for the holding company was calculated using the weighted score of the holding company’s banks.

The table below shows the results by holding company. As states and municipalities remain in flux on closing and opening their local economies, a bank’s branch network will be impacted based upon the resiliency of the local market to react to the COVID-19 pandemic and the relative risk amongst banks will differ based upon the geography of their networks.

A final note behind the methodology:

— Branches within a holding company were excluded if the county, the resiliency score and/or the service type of branch (non-full service beanches are excluded).

— Assigning resilience by county to a branch is less precise than assigning resilience based upon the local branch market area. A better measure could be calculated by analyzing the branch markets by tract and assigning the weighted score by tract.

— County are assigned scores as follows: 0 = Population with Zero Risk Factors; 1.5 Population with 1 to 2 Risk Factors; 3 = Population with 3 or more Risk Factors

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