As Chevy Chase Bank plans to start shutting down branches in 54 Giant Food stores in August, executives say the privately held bank, based in Bethesda, is one of ‘‘a number of large banks” that are focusing more on conventional branch banking.
But other banks are making the in-store concept work. And it’s growing nationally, according to some studies.
Provident Bank of Baltimore was among the first banks in Maryland to open in-store branches, said Stephen K. Heine, Provident’s executive vice president for consumer and business banking. The bank opened its first in-store branch in 1993 at a Shoppers Food & Pharmacy in Baltimore. It now has 63 branches, with another slated to open in November in an Annapolis Shoppers, he said.
‘‘Customers have told us loud and clear that they want to use multiple channels for banking,” Heine said. ‘‘The in-store branches have seen good customer growth.”
While some banks have gotten out of store banking, from 2004 to 2007, the number of in-store bank branches nationwide grew from 4,200 to 5,121, according to a study by Boston research firm Celent.
Most of Chevy Chase’s store branches are about 300 square feet. Provident’s store branches — which include 45 in Shoppers stores, eight in Superfresh markets and seven in Wal-Mart stores — average from 500 to 600 square feet, Heine said. ‘‘There is enough area for privacy,” he said.
Provident also views the relationship as a partnership and ‘‘proactively engages clients in the stores,” Heine said.
‘‘Colleagues who work in our in-store branches are engaging with excellent communication skills,” he said.
The convenience factor is important to those who use the in-store branches, Heine said. The branches are open on weekdays later than conventional branches, until 7 p.m. They are also open until 5 p.m. on Saturdays and 4 p.m. on Sundays.
Among other grocery stores with in-store bank branches in the region, Safeway has several locations with SunTrust branches.
Most of the Chevy Chase branches inside Giant are in the Washington, D.C., region, with a few in the Baltimore area, Salisbury and Rehoboth, Del.
The decision not to maintain the in-store branches was made after hearing from Chevy Chase customers that they preferred the bank’s larger and more private neighborhood branches, W. Scott McSween, the bank’s executive vice president for the retail banking division, said in a statement.
‘‘Research conducted on behalf of the bank showed that while customers value the convenience of supermarket branches, a substantial percentage of the bank’s customers prefer the privacy afforded by Chevy Chase Bank’s traditional neighborhood branches, particularly when discussing their financial needs,” McSween said.
Unlike publicly traded banks, Chevy Chase is not required to immediately release quarterly financial statements. But it must report that information to the Federal Deposit Insurance Corp., which usually winds up on the FDIC Web site several months after the quarter ends.
In the first quarter of 2008, Chevy Chase recorded a net loss of $4.9 million, which was lower than the loss of $5.9 million in the 2007 first quarter, according to the FDIC. The institution had about 4,000 employees as of March after shedding some 700 in the previous year.
Chevy Chase had $15.1 billion in assets as of March, up from $14.3 billion in March 2007.
About 240 employees in the bank’s supermarket branches will be affected by the closings, and executives are ‘‘working to find comparable positions in other branches for the majority of these employees,” according to bank information.
The closures come as a 10-year contract between Chevy Chase and Giant expires in August. ‘‘It was a mutual decision,” said Giant spokesman Jamie Miller.
While branch closures are expected to begin in August, Giant has not finalized a closure schedule.
Giant is looking for another bank to come in to its stores, Miller said. ‘‘We are currently in discussions with other parties,” he said, declining to name any potential new partners.
Heine said Provident is evaluating the implications. ‘‘We regularly evaluate our branch network and where we want to be,” he said.
Chevy Chase has invested ‘‘significantly” in new traditional branches in recent years and is beefing up its ATM network to upgrade to state-of-the-art technology to make them easier to use and faster, McSween said.
‘‘We plan to continue to open new branches to ensure that we have convenient options for our customers,” he said. ‘‘We’re also enhancing our online offerings. We have a significant Web site upgrade currently in progress, and we will add the ability for customers to open accounts online.”
Giant and Chevy Chase are in talks about whether to continue operating bank ATMs in the stores.
