The Branch is Back and This is Why
As we move through 2026, the banking industry continues to navigate a rapidly evolving economic environment shaped by inflationary pressures, shifting consumer behavior and intensified competition for deposits. One trend has become increasingly apparent: growth focused banks and credit unions are investing in branching initiatives that position them to attract new customers, retain clients, build core deposits and serve their communities more effectively.
At The Long Group, we continue to see this momentum accelerating across the country. The 2026 Community Bankers Survey is affirmation with respondents relying on organic growth, placing priority on further penetrating existing markets and planning expansion into new markets.
The Backdrop
Inflation continues to shape banking strategy: Supported by strong loan demand and superior asset quality, liquidity has become the financial industry’s present challenge as deposits continue to be deployed into loan volume. With inflation stalling deposit growth the search for deposits is real. Identifying and capturing the incremental growth opportunities available within each existing market served and profitably executing market expansion is a necessity.
The Deep Dive
Persistent inflation has continued to erode consumers’ real income, leading many households to use savings to maintain their standard of living. This has stifled industry-wide deposit growth. As a result, deposit aggregates have remained under pressure over the last several years.
Specifically, 22 states in the nation have witnessed deposit contraction over the last three years (three year annual average). Furthermore, only eleven states have witnessed real deposit growth, expanding deposits faster than interest postings.
More recently, geopolitical instability and elevated energy prices have added additional headwinds to deposit generation with inflation reaching a three year high of 4.2% in April and the U.S. personal savings rate falling by 70% from its long term historic average. With funding competition intensifying across the industry, banks and credit unions are increasingly focused on generating stable, relationship-based deposits to support quality loan demand and preserve margin performance.
The Action
Data brings the story of every market to life, it identifies growth opportunities contained within existing markets and objectively charts expansion plans.
Thoughtful growth starts by evaluating existing markets served to discover remaining growth opportunities generating greater value from investments already made. Furthermore, knowing the aggregate opportunity available and the timeline required to acquire it places a clock on expansion plans which is critical to staying ahead of the growth curve.
While branch expansion is expensive, with proper planning it is also economically rewarding. Knowing the branch capacity of a given market determines markets to avoid and markets worthy of resource commitment.
Combating the liquidity challenge requires a plan to succeed as community banks and credit unions remain focused on growth, market expansion and customer acquisition.
The Look Ahead
Financial institutions that consistently outperform their peers remain revenue focused, investing strategically in initiatives that position them for long-term growth.
Growth is not just about adding assets or increasing branch counts. It is about creating the scale necessary to strengthen the institution’s future, whether by leveraging their existing infrastructure or by introducing the brand to new geography. Creating a competitive advantage to attract more households, retain business and deepen relationships lifts the revenue growth trajectory more efficiently and creates the economic capacity to reinvest in people, technology, the branch network and new markets.
Across the country, banks and credit unions are actively investing in their futures, pursuing thoughtful growth strategies designed to create long-term value for their organizations and the communities they serve. The resilience and optimism demonstrated by community banks and credit unions continue to be one of the most encouraging trends we see in the industry today.
At The Long Group, we are proud to partner with institutions that are investing in this future. Our mission is simple: remove the risk from branch decision making by providing financial institutions with objective, data-driven insights that support confident network optimization and expansion decisions.
Source: The American Bankers Association’s Community Bank 2026 Priorities Survey
- Current Priorities for Community Bankers – 78% Growing Core Deposits
- Top Initiative for Community Bankers – 73% Expanding Organically (not through merger or acquisition)