Community banks are often reluctant to close branches, but rising costs are encouraging management teams to take a hard look at cutting back.

Noninterest expenses at banks with $40 billion or less in assets rose nearly 4% in the fourth quarter compared to a year earlier, averaging $36.9 million, according to data compiled by American Banker. Higher costs have been a drag on efficiency. The average efficiency ratio was 68.26% in the fourth quarter, compared to 66.46% a year earlier.

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