Branch Real Estate Can Be Capital, Too

For many banks and credit unions, the branch is still part of the brand, the service model, and the community presence. Bill Yeomans, founder and president of Brookline Branch Services, sees this in-person element as “the billboard”—a visible signal that the institution is there. 

But that does not mean every branch has to be owned. 

In a sponsored ProSight Banking Strategies Podcast conversation, Yeomans explained why sale-leasebacks are getting more attention in banking. In a sale-leaseback, an institution sells a branch property to a third party and continues operating there under a lease. The bank keeps the location, but frees up capital tied to the real estate. 

That capital question is becoming harder to ignore. Yeomans said banks and credit unions are under pressure to decide where investment dollars should go: AI, cybersecurity, mobile banking, marketing, personnel, or branch real estate. He also said banks and credit unions own, on average, roughly 50% to 60% of their branches, leaving significant capital embedded in them. 

For institutions reviewing their networks, a few practical considerations stand out: 

Decide whether ownership is strategic. Yeomans pointed to retailers such as Walgreens and CVS, which operate thousands of stores while owning only a small share of their locations. He said those companies treat real estate as essential, but outside their core business. Banks may not make the same decision everywhere, but the underlying question is useful: Is this particular property core to the strategy, or could the capital do more elsewhere? 

Look at oversized branches. Many older branches were built for a different banking model. Yeomans said some branches are 10,000 to 15,000 square feet, while the average branch today is closer to 2,500 to 5,000 square feet. In a partial sale-leaseback, the bank can sell the property, lease back a smaller footprint, modernize the space, and open the rest of the building to other tenants. 

Think about the community effect. Yeomans described a Wisconsin branch where Brookline reduced the bank’s space and signed up a United Way, YMCA, and a commercial tenant. He said deposits increased, business activity rose, and the new tenants created more foot traffic, community connection, and support for the bank’s CRA commitment. 

Know what buyers will examine. Yeomans said acquirers look at three things: the bank’s credit and business plan, the quality and flexibility of the real estate, and the lease economics. Those factors help determine whether a sale-leaseback can work for both the buyer and the institution that wants to keep operating from the branch. 

The takeaway: A sale-leaseback forces a broader branch-network conversation: where the bank needs to be, how much space it needs, and whether owning the real estate is the best use of capital. 

Listen to the entire conversation.