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How A Small Town Kept their Bank Open

Adam Rust's picture

Posted April 18, 2011

Editor's note: This is an account, written by a local businessman, about how a small town was able to keep a bank. Lake Lure, North Carolina is a forested community in the mountains of Western North Carolina.

They once had two banks. In 2010, one branch closed as part of an effort by a regional

community bank to shore up its balance sheet. Last year, following the acquisition of their other local bank (Carolina First) by Canadian banking giant TD North, they received the word that their bank would be closed. TD North suggested that customers that still wanted the services of a branch bank should drive 20 miles to Hendersonville, North Carolina.

The New York Times recently chronicled the scores of small towns, mostly poor, that are losing their banks. Lake Lure is not a poor town.  Lake Lure is endowed with a lot of great things: It has plenty of natural beauty which attracts plenty of tourists. Over the years, it has become a retirement destination for many seniors. Its down town never lost its vitality.

Lake Lure didn't take the news and just roll over. Instead, they created a team of local leaders that included businessmen, the local town government, a state park, the grocery store, and some bankers. They filed a complaint with the Office of the Comptroller of the Currency - the primary regulator of the US operations of TD North, and they petitioned to speak directly with the leaders of the bank.

Keeping our Bank Open Here's how we did it in a small NC mountain town.
by Bill Frykberg
President Lake Lure NC

Lake Lure is a small mountain town in the Foothills of the Blue Ridge Mountains. We have been
served by a commercial bank for the past 60 years. During the Winter of 2011 we got caught up in the wave of downsizing that is effecting banking nationwide. First in December 2010 a small regional "watch list" bank Mountain First announced that it was closing its Lake Lure branch.

This event in itself did not set off much in the way of alarm bells as we had another larger bank in town that could easily step in and serve Mountain First's depositors. The real bombshell went off in late February 2011 when TD Bank NA announced that it was closing its lake Lure Branch along with four other branches in the NC Foothills.

TD Bank announced it was closing the Lake Lure Branch and shifting the deposits to an existing branch in Hendersonville, NC. Hendersonville is located 20 miles from Lake Lure over curvy mountain roads. Lake Lure citizens and businesses would have to make an hour and a half to two hour trip whenever they had to go to the bank. This closing pushed everyone's buttons and the community was angry. This anger was inflamed by TD Bank personnel who were busy telling us how wonderful it was going to be to do our banking 20 miles away because the branch would be open extended hours and we would get a free safe deposit box for a year. This was an argument that was not selling in Lake Lure and neighboring Chimney Rock.

My first move was to check out the internet where I came across the NC Community Reinvestment Association. This group's advice was to analyze the situation and then file a complaint with the Office of the Comptroller of the Currency which was the Federal Agency regulating TD Bank. This complaint process is done on-line.  Within several days I had a response from a TD Bank official in Cherry Hill, NJ again applying the same soft sell approach of how much I would love banking 20 miles away with extended hours. I fired back with a smoker of a letter advising TD Bank that they had no concept of our community and the difficulties the closing would provide to the citizens of Lake Lure and Chimney Rock. 20 miles via interstate is one thing. 20 miles over curvy mountain roads is an other. We are a tourist town with a large Ingles Grocery Store, a major tourist attraction, Chimney Rock State Park, as well as a number of lodging facilities, bars and restaurants. All of these businesses generate significant cash deposits daily. Without a bank, safety for employees was going to be a big issue. With a large retired and senior population convenience was going to be a big issue as well.

I went to meet with our Mayor Bob Keith and said we had to do something about this. Keith formed a community committee composed of 12 local business leaders including a local resident, Gary McCall, who formerly managed the Lake Lure Carolina First Bank. Our initial effort was to recruit a new bank to replace Carolina First. We felt that when a Top 10 bank planned to close a branch there was probably little we could do to change their mind.  We began to build our case to recruit a new bank and realized that we had a very compelling case to keep the Carolina First Bank that we already had.

We realized the Carolina First had probably made a mistake and did not know it.

Our case rested on the following key facts.

1. The Lake Lure/Chimney Rock area had a base of deposits of $35 million,  split with $23 million in Carolina First and $13 million in Mountain First. This was more than enough deposits to support a commercial bank. With Mountain First closed, Carolina First would have 100% market share.

2. Lake Lure was a growing community with population up almost 10%  in the new census figures and the community had taken steps to put the foundations for growth by recruiting a charter school to open a K-7 school in the area.

3. The other four branches that Carolina First had decided to close were all served 3 or more banks. Lake Lure was the only branch being closed that would have no bank.

4. Other banks were interested in opening a branch in Lake Lure and that if they did, very few of the deposits Carolina First planned to shift to Hendersonville were going to stay. A major factor in this was the willingness of the Town of Lake Lure to shift its $1,5000,000. in deposits to any sound bank that opened in Lake Lure.

A delegation from the community committee led by the Mayor went to meet with Carolina First regional management in Asheville.  We asked them to reconsider their decision to close the Lake Lure branch and clearly presented our case.  We were the only community that faced a branch closing that had made any contact with Bank management. We further advised them that we had 100 signed petitions that would be publicly deposited with Comptroller of the Currency if they did not change their mind.  We further advised Carolina First that we were going to have a bank in Lake Lure and that the plan to shift deposits to Hendersonville was unlikely to be successful because they had made the community so mad.

Carolina First said that they would think about our presentation and get back to us in a week to ten days.In about a week the region President of Carolina First scheduled a meeting  in Lake Lure with the community committee. He listened to our issues and recommended to TD Bank that they change their mind on the Lake Lure closing. His recommendation prevailed and within a few days we had word that the Lake Lure branch would be staying open.

In thinking about this and asking why it worked several things are apparent.

1. Even large banks have regulators that they must deal with. Closing a branch in a community with plenty of banks is one thing. Eliminating the only bank in town when there is plenty of deposits on hand is another.

2  Build a solid case. We had a growing community with a viable business community and leadership that from the top down was committed to having a viable bank in town.

3. Take a positive approach. In our case it worked even though initially we thought it had little chance.

4. The old police strategy of Good Cop/Bad Cop is a very good idea. At all times Carolina First was well aware that the deposits they thought they had locked up would surely move and that their primary regulator would be inundated with complaints that would be very had to deal with and explain away.

Well, that's our story how a small NC mountain community worked with a Top 10 bank and kept it's branch open.