|Danielle Baker (Photo by Veasey Conway for WSJ)|
The story opens in Roxobel, N.C., population 220, with the case of Danielle Baker, who "wanted a $324,000 loan last year to expand the peanut-processing business she ran from the family farm. She had a longstanding relationship with the Roxobel branch of Southern Bank, and she thought Southern would help fund the peanut operation she had spun off, too. But that branch—the town’s only bank—closed in 2014. A Southern banker based in Ahoskie, 19 miles away, said Baker’s Southern Traditions Peanuts Inc. was too small and specialized, she says. A PNC Bank branch also turned her down," the Journal reports. "She finally got a loan from a nonprofit in Raleigh two hours away that provides financing to small businesses but not other traditional banking services. She must drive 19 miles every afternoon to make cash deposits or get change for her cash register, and expects to make a two-hour trip when she wants to refinance."
“It’s very aggravating on a day-to-day basis,” Baker told the newspaper. “If you are not a big company with tons of assets and a big bank account, they just overlook you.”
Simon and Jones report, "Rural communities in parts of the U.S. have become less attractive to local banks because they are suffering from a variety of economic ills that have taken a toll on business activity and new business formation." Those include "weak schools," big-box stores that crushed local retailers, lower credit ratings after the financial crisis and migration of young people to cities.
|WSJ graphic shows decline of rural lending. For a larger version of the chart, click on it.|
A town with no bank has little future. “It’s really like a death sentence for a small town because the bank is the center of all activity,” North Carolina insurance agent Tommy Davis told the Journal. He moved his office 25 miles from Colerain, pop. 187, to Windsor, pop. 3,700, when the only bank branch in Colerain closed. There's a lot more in the story; read it here.