Some industry observers have questioned the future of bank branches in light of the pandemic, as customers grow accustomed to digital channels and banks rethink the viability of brick and mortar amid a recession.

The number of bank branches in the U.S. has dwindled in the past decade. Full-service bank branches declined 12% between 2010 and 2019 — from 95,000 to 83,000, according to a Quartz analysis of Federal Deposit Insurance Corp. (FDIC) data.

Despite the pandemic, Brooks said the OCC is not prepared to let banks skirt existing regulations when it comes to closing branches.

“I think the idea of, ‘We’ll just go ahead and let branches abandon our cities’ — I think we’d regret that on the back end of this,” he told the Financial Times.

Banks regulated by the OCC must give the agency 90 days’ notice of plans to shut down branches, including a rationale for the decision.

While the regulator plans to continue holding banks to certain standards, it has acknowledged the hardships institutions face as businesses across the country close their doors, and has called attention to the potential negative impacts of lockdowns.

In a June letter to the leaders of the National League of Cities, the U.S. Conference of Mayors and the National Association of Governors, Brooks urged local governments to consider the adverse impact state-ordered coronavirus lockdowns have on the U.S banking system.

Prolonged lockdowns could impose several negative consequences on banks and borrowers, including mass loan delinquencies and a decrease in banking services in low- or moderate-income areas, among others, Brooks said.

“Such high delinquency rates have the potential to threaten the community and midsize banks that are the economic lifeblood of local communities, a factor that your members should take into account in weighing the risks and benefits of lengthy continued lockdown orders,” he said.

In a semiannual report, released late last month, the regulator said financial institutions are beginning to see the adverse credit effects of the economic shock brought on by the pandemic through increased customer forbearance requests and higher provisions for loan losses.

“Credit losses in particular coupled with overhead expenses and lower net interest income because of monetary policy in response to COVID-19 will place some drag on financial performance of our banks,” Brooks said. “We expect that the resiliency of credit portfolios, which were very strong before the pandemic will be tested going forward.”

The regulator also said compliance risk at banks is elevated due to a combination of government economic recovery programs — such as the CARES Act and the Paycheck Protection Program — and the increased number of employees working from home.