American Banker: When a small town loses its only bank

American Banker, February 2, 2020: When a small town loses its only bank

If you squint into the desert sunlight, you can still read the faded letters on the white sign atop the former bank branch overlooking the Gila River.

National Bank of Arizona, the last in a series of out-of-town banks to operate a branch in this small, geographically isolated community, closed its doors in July 2016. Today the beige-colored building is vacant, except for an ATM operated by another company, which charges $2.75 for a cash withdrawal.

Posted on the glass front door is a notice that invites visitors to patronize the bank’s branch in Safford, Ariz. The trouble is, that location is 40 miles away. “We apologize for any inconvenience,” the notice reads.

Critics contend that bank regulators should be doing more to keep rural branches open. “It’s really common to hear, even from regulators, that people don’t need a bank branch anymore,” said Jason Richardson, director of research at the National Community Reinvestment Coalition.

He argued that maintaining rural branches should be a bigger priority for regulators, pointing to 2017 research from the University of Delaware that found each branch closing causes a 20% decrease in small-business loan volume. The study attributed its findings to the substantial role that relationships still play in small-business lending.

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