The news: BMO announced that it would sell 138 branches—nearly all in the Mountain West and Midwest—to First Citizens Bank. The sales includes about $5.7 billion in deposits and about $1.1 billion in loans.

More on this: The sale represents less than 3% of BMO’s $253 billion in assets. It plans to open 150 new branches over the next five years, with a focus on California. It’s part of a long-term strategy to concentrate and strengthen its position in core markets: In 2023, BMO bought Bank of the West, a lender headquartered in California, acquiring more than 500 branches.

At the same time, First Citizens is expanding nationally rather than concentrating its geographic exposure: Its branch footprint is concentrated in the Mid-Atlantic and South, but it moved West via its merger with CIT Group in 2022. And it pushed into California when it bought most of Silicon Valley Bank’s assets out of receivership in 2023.

The macro trend: BMO and First Citizens, big banks built by acquisition, are only getting bigger. BMO is No. 10  and First Citizens is No. 11 on the list of the largest banks in the US. (They’ll fall to Nos. 11 and 12, respectively, after Fifth Third’s acquisition of Comerica closes.) In the last five years, Capital One, U.S. Bank, and PNC completed huge mergers, pressuring others to scale. And with its smaller purchase of FirstBank, PNC is also growing its Western footprint.

Our take: Customers still value branches: 55% of respondents to EMARKETER’s US Banking Consumer Habits survey said “branches near me” ultimately led them to purchase banking products or services. While digital services enable national reach with little additional cost, physical connection with consumers and small-business customers is crucial. And for banks scaling to the degree that they offer commercial banking services to corporate customers, an in-person presence is mandatory.

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