Ask three bankers about the value of in-store branches, and you might get four opinions. Moreover, you would swear none of them are even discussing the same business when the conversations are done.

That is how perplexing it is in trying to determine whether bank offices inside supermarkets and other retail stores are smart, low-cost service channels, or are meant for the scrap heap in today's high-tech world in favor of bigger, premium-service branches.

BOK Financial in Tulsa, Okla., cast its vote against them last week when it said it will shut down all 39 of its supermarket branches. Transaction volume has steadily declined at the branches and too little other business is conducted there to justify keeping them open, said Pat Piper, executive vice president for consumer banking at the $29 billion-asset BOK.

When customers enter a BOK branch now, they are holding conversations with bankers about opening loans or other complex issues, Piper said. Those conversations do not happen at a supermarket branch, he said.

"[In-store branches] are so small. There's no privacy," Piper said. "Conversations with clients have become longer and the in-store channel is just not conducive to that."

Do not tell any of this to the Ohio banks Fifth Third Bancorp and Huntington Bancshares. At the $134 billion-asset Fifth Third, in-store branches boast transaction volume that's 6% higher on average than traditional branches, said Chad Borton, executive vice president and head of Fifth Third's consumer bank.

Fifth Third's most-popular supermarket branches, which the company calls Bank Marts, are located at Kroger stores in its home market of Cincinnati.

"Our Bank Marts are quite busy," Borton said.

The $64 billion-asset Huntington, in Columbus, is so pleased with the performance of its in-store branches that it plans to open 50 new locations by the end of next year, inside the supermarket chains Giant Eagle and Meijer.

Growth in its new households served is in the mid-30% range per year at in-store branches, versus 17% at traditional branches, said Mary Navarro, senior executive vice president and director of retail and business banking.

BOK clearly is not seeing the same customer response. Consumers' habits have changed since 1993, when BOK opened its first in-store branches, Piper said.

"We got into that space … to provide added convenience of taking care of that trip to the bank and the trip to the grocery store that you had to make every week," Piper said. "Now, that trip to the bank every week just isn't needed anymore."

BOK's supermarket branches, which are largely located inside regional chains like Buy For Less and Reasor's Foods, consistently measure smaller than traditional branch counterparts. BOK's supermarket branches average about $13.5 million in deposits per branch. The average per-branch deposit level at 79 BOK branches in Oklahoma is about $43 million.

For a branch to be profitable — either freestanding or located inside a retailer — it should hold between $25 million and $35 million in deposits, according to Ken Thomas, a Miami banking consultant.

Another drawback for BOK is that fewer loans have been made at its supermarket branches. The average level of outstanding loans at in-store branches is about $4.5 million, compared with about $15 million for traditional branches, Piper said.

"Our decision [to close] really comes down to the changing economics of not only servicing, but also the value of the deposits," Piper said.

BOK is not alone in discarding the in-store format. The $19 billion-asset TCF Financial in Minneapolis and the $10 billion-asset Old National Bancorp in Evansville, Ind., have also recently closed supermarket branches. Nationwide, the number of in-store branches has steadily dropped since 2009, falling from 6,155 to 5,438 at March 24, according to SNL Financial.

One reason may be that banks, in their never-ending quest to cut expenses, see in-store branches as an easy way to achieve cost savings, by simply paying the fee to terminate a lease early, said Dave Martin, executive vice president and chief development officer at Financial Supermarkets, which consults with banks on opening in-store branches.

"An in-store branch is far less expensive and easier to get into," said Martin, who also regularly writes BankThink columns for American Banker. "But they're also easier and less expensive to get out of."

It is likely that another bank will pounce on BOK's in-store branch leases, Martin said. Many banks see supermarket branches as the best way to reel in new customers, he said.

"In-store branches produce a disproportionate amount of new household growth," Martin said.

Supermarket branches also give a bank a way to grow faster at a lower cost, said Carter Houchins, senior vice president at NCBS, which advises banks on supermarket branches

"Capital is closely scrutinized at banks and you can open three in-store branches for the same cost as one traditional branch," Houchins said.

Huntington adds new households from its in-store branches, and also makes loans and sells fee income-based products from them, Navarro said. The floor plans for Huntington's existing supermarket branches include only one separate office space. It is adding an additional office to floor plans for new branches, to handle the demand for opening new accounts for checking, as well as investments, home equity lines and other loans, she said.

Other concerns nevertheless persist about the future of in-store branches, not the least of which is Wal-Mart Stores. The giant retailer said in September that it will begin offering basic checking accounts, along with the other financial services it already provides.

It is unclear, however, if Wal-Mart actually poses a true threat to banks. Wal-Mart is largely going after unbanked consumers that don't have an account with a traditional bank anyway, said Jonathan Donahue, senior managing director at bank consulting firm Profit Insight in Mooresville, N.C.

"Wal-Mart is going after the users of high-cost payday lenders, check cashers, pawnshops and remittance companies," Donahue said. "They are moving them into their store and offering them low-cost financial products."

Finally, it may come down to just being in the same place as where a bank's customers are. Huntington's Navarro said the bank keeps extended hours, including Sundays, at its supermarket branches to respond to customer demand.

"People are always buying food and that's always where we are," she said.

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