The last bank branch standing

From Alaska to Arkansas, communities across the United States face a growing challenge: declining access to physical bank branches. As nearby bank branches close, communities are at risk of becoming banking deserts. In some communities, community development financial institutions (CDFIs) are stepping in to help fill the gaps.

Another year, another 11 banking deserts

The post-pandemic surge in new banking deserts—a result of bank branch closures across the US—appears to be leveling off, according to the latest data available in the Banking Deserts Dashboard. As of mid-2024, there are 3,629 banking deserts and 3,094 potential banking deserts across the US. These numbers indicate that 11 new banking deserts and 15 new potential banking deserts appeared in the past year.¹

Although these recent increases are small relative to prior years, 12.3 million Americans currently live in areas defined as banking deserts. Another 11.1 million Americans live in potential banking deserts. This lack of access to a physical bank branch can create obstacles for certain consumers, including those who are lower-income, are older, live in a rural area, or have a disability, who are all more likely to visit their bank in person.

What is a banking desert?

We define a banking desert as a census tract without a bank branch located within it or within a certain radius from its population center. That radius is determined by the type of community:

• 2 miles for urban communities
• 5 miles for suburban communities
• 10 miles for rural communities.

A potential banking desert is a census tract that can become a banking desert if one bank branch closes.

How might financial institutions meet the in-person banking needs and preferences of the millions of consumers who live in banking deserts? It is rare for a new branch to open in a banking desert—just 1% of 2023 deserts were “cured” this way by 2024.

However, it is not uncommon for the “last branch standing” in potential deserts to stay put.

Among 2023 potential deserts, 96% remained potential deserts in 2024. The last branches standing in these communities are bridging the financial access gap. Their activities, which can extend well beyond the provision of financial services, reinforce the powerful connection between financial access and community resilience. These last branches also act to bridge diverse geographies and cultures to the modern financial landscape.

In some cases, the lender still active in potential banking deserts is a community development financial institution, or CDFI. Like traditional banks, CDFIs offer a range of financial services to individuals, organizations, and businesses. CDFIs focus on providing these services in communities often overlooked by mainstream financial institutions. 

There are a variety of CDFI structures, including

CDFI banks and credit unions operate similarly to traditional banks but emphasize community support over profit. They are vital in regions where traditional banks are scarce or offer limited services, as illustrated by the Banking Desert Dashboard. 

Do you live in a banking desert?

The Banking Desert Dashboard is an interactive tool that visualizes and tracks banking deserts and potential deserts across the US. The dashboard details bank branch distances and community characteristics. The dashboard helps users identify banking deserts and understand the affected populations.

Expanding access to banking in Arkansas

With 55 banking deserts and 34 potential deserts, the state of Arkansas has lower rates of in-person banking access than the US average. Nine percent of Arkansas’s population lives in banking deserts or potential banking deserts, two percentage points more than the national rate.

Southern Bancorp, a community bank CDFI, serves as the last branch standing for three rural communities near Elaine and Bismarck, Arkansas. Darrin Williams, CEO of Southern Bancorp, explained that expanding banking access in Arkansas communities is a core value of the institution. “Being in communities where we are one of only a few bank branches is just one of the ways that we show up,” he noted. “We focus not just on the geographic lack of access to capital, but also on the demographic lack of access to capital. It’s core to our business model.”

“We focus not just on the geographic lack of access to capital, but also on the demographic lack of access to capital. It’s core to our business model.”
– Darrin Williams, CEO, Southern Bancorp

Southern Bancorp’s Bismarck branch serves as the last branch standing for two census tracts in Arkansas’s Hot Spring County, a rural ranching community that is a gateway to nearby resort and recreational areas. The two potential deserts are home to more than 6,000 residents and have relatively high populations of residents with disabilities (19%). The areas also have limited access to broadband—up to 31% of households lack access to broadband at home and as many as 15% of households lack access to a computer, smartphone, or tablet.

This pattern is evident across the US. Populations in areas with low broadband access or with high concentrations of residents with disabilities are more likely to live in banking deserts and potential deserts compared to the nation overall. 

Despite advances in online banking, consumers without access to digital resources might still depend on in-person solutions to meet their banking needs. According to Williams, this can be a task as routine as paying the utility bill.

“Our Bismarck branch is a place where the community can come not only to bank, but also to pay their water bill and their electric bill,” Williams noted. The bank also offers free assistance with tax filing and financial counseling services.

Services such as these can be especially important to low- and moderate-income (LMI) communities. “Banks need to provide not just products, but also tailored support for community-specific challenges,” says Nathan Pittman, chief bank officer and senior vice president of policy and communications at Southern Bancorp.

A HOPE for banking in Mississippi

Mississippi residents are even more likely to live in banking deserts and potential deserts than Arkansas residents. Eleven percent of the state’s population lives in banking deserts or potential banking deserts.

One financial institution serving Mississippi’s potential deserts is HOPE, a credit union and CDFI. HOPE works to connect communities across the rural South with financial resources that foster financially healthy communities.

HOPE serves as the last nearby branch for residents of Terry and Utica in Hinds County, Mississippi. Compared to the state, the county has even higher rates of residents living in banking deserts and potential banking deserts—nearly 20% of the county’s population.

Terry and Utica are also both predominantly Black communities. Compared to the national average, majority Black communities have seen faster growth in banking deserts across the country. Between 2023 and 2024, majority Black areas saw a 2.9% increase in deserts, up to 180 total banking deserts, while the US overall saw an increase of 0.3%.

Access to a physical banking institution—or the lack of it—can significantly impact daily lives in places like Hinds County. “For many people, traveling even five miles feels like something is being taken away,” Felicia Lyles, senior vice president of retail operations at HOPE Credit Union, noted. “This is especially true in communities with financial institutions for years, only to see them withdraw services over time. Even when there was a brick-and-mortar presence, many banks weren’t truly serving the community—they weren’t offering basic services like loans or the ability to open accounts.”

“For many people, traveling even five miles feels like something is being taken away. This is especially true in communities with financial institutions for years, only to see them withdraw services over time.”
– Felicia Lyles, senior vice president of retail operations, HOPE Credit Union

HOPE’s community-first approach

HOPE Credit Union fills financial access gaps, often starting with grassroots efforts. For example, before committing to opening a branch in Utica, HOPE set up temporary operations in City Hall. The credit union worked with the mayor to gauge community interest and opened more than 400 accounts before laying the foundation for a physical location.

This community-first approach includes understanding and addressing the specific needs of the residents. For instance, HOPE offers paper business checks in response to local businesses’ requests—something other institutions in the area did not provide.

HOPE’s mission extends beyond supporting communities’ banking needs. The nonprofit works closely with faith-based organizations and local municipalities on activities like ensuring access to fresh food and advocating for policy changes. In small towns like Utica, which lacks even a grocery store, HOPE collaborates with local leaders to find long-term solutions that strengthen the entire community.

“We are creating access to instruments that are accessible to a community that otherwise would not have access to affordable financial products and services,” said Kiyadh Burt, vice president of policy and advocacy for HOPE’s Policy Institute.

 “Having a brick-and-mortar branch offers residents in these communities the ability to get their financial questions answered, to build that relationship, and to build deeper and broader community,” he added, “because our work is not just around their retail needs, but it’s also around community economic development.”

As HOPE expands into underserved areas, it remains committed to providing financial services, human connection, and community support. For residents of towns like Utica and Terry, HOPE is more than a CDFI—it is a lifeline.

“Having a brick-and-mortar branch offers residents in these communities the ability to get their financial questions answered, to build that relationship, and to build deeper and broader community.”
– Kiyadh Burt, vice president of policy and advocacy, HOPE’s Policy Institute

Banking on an island

For residents of Alaska, the odds of living in a banking desert or potential banking desert are more than three times greater than the average American. Alaska has 39 deserts and 20 potential deserts, and 25% of the state’s population lives in banking deserts or potential banking deserts. For Americans who live in majority American Indian or Alaska Native communities, 65% are located in banking deserts or potential deserts—nine times higher than the national average.

One coastal Alaskan CDFI, Tongass Federal Credit Union (TFCU), is filling financial access gaps in Native Alaskan communities, especially in the southeastern island area. Serving Native communities in coastal Alaska is important for Helen Mickel, president and CEO of TFCU.

According to Mickel, TFCU focuses on helping remote and isolated areas by tackling challenges that more mainstream financial institutions may shy away from. The credit union’s strategy includes three areas of focus:

Many of these community-sponsored locations are referred to by Tongass as “community microsites.” Mickel explained, “Our model thrives because we don’t just parachute in; we integrate with the community. From our ‘canoe shed’ office in Hoonah to our quaint cabin in Yakutat, these efforts represent a commitment to service over profit.”

“Our model thrives because we don’t just parachute in; we integrate with the community. From our ‘canoe shed’ office in Hoonah to our quaint cabin in Yakutat, these efforts represent a commitment to service over profit.”
– Helen Mickel, president and CEO, Tongass Federal Credit Union

The Tongass location in Metlakatla was once a microsite. Now a full-fledged branch, this location serves Annette Island, home to the Annette Islands Indian Reservation. The majority Alaska Native community has about 1,500 people. Nearly 30% of its households don’t have broadband access at home.

Operating in these communities poses plenty of challenges. Mickel pointed to logistical hurdles, such as unreliable internet connections and difficulty finding and retaining employees. They’ve also encountered community apprehension about financial transparency. “In tiny towns, people don’t want their neighbors knowing their finances,” she noted.

Another significant hurdle is accessibility. Many of these sites are reachable only by float plane or ferry. Mickel described trips to Metlakatla, a 12-minute float plane ride from Ketchikan, or the four-hour ferry ride to Prince of Wales Island as journeys that require real dedication, but they are necessary to serve these populations.

Expanding the mission across waters

Through its innovative community microsite model, TFCU provides a blueprint for how financial institutions can support banking deserts. Their microsites are small and often single-employee operations, housed in spaces provided by local tribal organizations and local government sponsors. Despite their size, they offer a full range of financial services, from business loans to mortgages.

The most recent microsite opened in Yakutat, a remote area at the northern tip of southeast Alaska. Sponsored by the local Tlingit Tribal Association, the microsite changed the area from a banking desert to a potential banking desert. The LMI area has about 600 residents. The next-closest branch is in Haines, AK—more than 150 miles away.

The impact of community microsites is clear in places like Hydaburg, where the sole employee seamlessly manages operations. Even in standard branch locations like Klawock, residents no longer need to travel to neighboring towns for banking services.

“We’re not just providing financial services,” said Mickel. “We’re fostering economic stability and empowering these communities to thrive on their own terms.”

The views expressed here are those of the authors and do not necessarily reflect the views of the Federal Reserve Bank of Philadelphia, the Federal Reserve System, or Fed Communities.

data notes

[1] All 2023 and 2024 values are as of June 30 of the respective year. Data presented throughout the article are the author’s calculations based on S&P SNL branch data, accessed October 2024; 2016-2020 American Community Survey data; 2022 FFIEC Census Flat File; US Census TIGER/Line Shapefiles; US Census 2023 delineation files; and the Missouri Census Data Center’s 2022 Geocorr application. A more detailed methodology can be found on the Banking Deserts Dashboard webpage.

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