Bank-Occupied STNL Assets Pose Challenges for Buyers and Sellers

A president of a large banking institution recently told me that bank branches have become very expensive billboard advertising for the brand. The older age demographic still likes to go “visit” their money, drop off or add something to their safe deposit box, or just enjoy a fresh cookie and a cup of unexceptional coffee. If you ask a younger person where they bank, a typical reply is: “Um…I have never been in a bank, I do everything through my app.” While larger stores are closing, bank branch footprints have been shrinking into 750-square-foot sites with two employees, desktop computers, and an ATM machine. Some banks, such as Capital One, have created Capital One Café, which also happens to be a bank branch.

All this change can be attributed to the combination of mobile/online banking technology and the fact that people are using less and less cash to buy things. The trends for how consumers spend money and conduct financial transactions have been picking up even more steam during the COVID-19 crisis, as they generate an accelerated amount of adoption and acceptance from demographic groups that had been resistant to utilizing them prior to the crisis. As a result of all these dynamics, we are seeing a significant amount of for-sale inventory on the market that consists of bank-occupied assets or those that were vacated by a bank branch over the past several months.