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Banks Deserting Small Towns

By Andrew Webb
Journal Staff Writer
    Citizens in the tiny northeast New Mexico village of Roy are wondering— will a town without a bank still be a town?
    Wells Fargo Bank recently sent letters to business and residential customers informing them that the local branch, which has been operating continuously as a bank since before Roy was a town and before Harding County was a county, will close April 28.
    Roy is not alone. Wells Fargo branches in Wagon Mound, Vaughn and Mountainair will also close in April, said bank spokeswoman Deanne McElroy.
    "It's going to be hard and bad," said Annette Esquibel, whose restaurant, Annette's Cafe, is the only eatery in Roy's one stop-sign town of about 310. "Our business banks there. It's the only bank in town.
    "We're all just kind of shocked," she said.
    Indeed, local officials worry about Roy's future if its residents have to drive 50 miles to the nearest bank in Springer to do their business.
    "This town is full of retirees and senior citizens," said Mary Ellen Menapace, who has lived in Roy for 60 of her 87 years. "A lot of people get their Social Security checks, cash it at the bank, and come in and pay their water bills. It would be a terrible inconvenience for them to have to go elsewhere to cash their checks."
    Mountainair has a Bank of Belen branch, but neither Wagon Mound nor Vaughn has another bank within 30 miles.
    The bank pull-out won't make doing business any easier, said Joanne Martinez, an employee at the Wagon Mound Phillips 66 gas station.
    "We'll have to take the daily deposits to Springer (25 miles to the north) or Vegas (50 miles to the south)," she said.
    Meanwhile, Vaughn's closest bank will be in Santa Rosa, about 45 miles away.
County's only bank
    The Wells Fargo in Roy is the only bank in Harding County, which has the smallest population of any county in New Mexico. There are no automated teller machines in the county.
    Harding County government in Mosquero will be hit particularly hard, according to Roy Mayor Lee Fluhman. Mosquero will be about 75 miles away from the nearest bank when the Roy Wells Fargo in Roy is shuttered.
    Harding County's two schools— the area's largest employers— also bank in Roy, as do the ranchers who make up the rest of Harding County's 750 residents, Fluhman said.
    In addition, Roy's city government deposits about $1,000 a day in various fees and collections.
    "I'm hoping another bank moves in, otherwise it'll be a severe hardship," said Clay Goret, who owns the Harding County General Store, a hardware and grocery outlet that, as he puts it, is downtown Roy.
    "This area is already hard-pressed for jobs and business, and this would make it harder," Goret said.
    The county population has shrunk from 1,000 when he and his family bought the store 11 years ago, he said.
    H. Patrick Dee, executive vice president and chief operating officer for Albuquerque-based First Community Bank, says banks are frequently faced with tough decisions in small towns where the costs of doing business are rising, but the population is not.
    First Community Bank, which operates about 50 branches in four states, closed a branch in Questa in September for similar reasons.
    "There was a time when it was relatively easy to be profitable in those smaller markets," Dee said.
Little hope for growth
    Increasing government requirements, especially on publicly traded institutions like First Community and Wells Fargo, require increasing staff and expensive technology, he said. Faced with the difficult challenge of serving shareholder and community needs, banks have to make decisions based on what they see as the potential for growth in loans or deposits at a local branch, he said.
    Towns like Roy, or Wagon Mound, which has a population of less than 400, have little likelihood of substantial growth.
    "Sometimes in this day and age, it's a lot harder to make a profit, and unfortunately, it comes down to a business decision that may not serve the needs of a local community," Dee said.
    Roy's Fluhman, who is also president of the nonprofit Harding County Economic Development Corp., fears a shuttered bank will bring business in his town to a halt. This past week, he began asking state banking regulators and local legislators to pressure Wells Fargo to sell the branch to another bank.
    "We can't do without a bank," he said. "If Wells Fargo wants to pull out, we're hoping they'll sell it to someone else."
A long history
    Menapace said the first bank in the area was the Roy Trust and Savings Bank, founded in 1912. The village of Roy was officially incorporated in 1916, four years later. At the time, the area that is now Harding County was Mora County. Harding County was created in 1921, Menapace said.
    The bank became the First National Bank of Roy in 1922 and later went through several owners, including Western Bank and Norwest, before Wells Fargo bought Norwest about nine years ago.
    "I don't remember a time we've been without a bank," said Menapace, who added that not only does she bank at the local Wells Fargo, she keeps important documents in a safety deposit box there.
    McElroy said she did not know how many local account holders the bank had but that the company was working with customers from all four branches to help them find alternatives.
    She said the bank would also work with employees at those branches to find other jobs within the company. She did not have an exact head count.
    The decision to close the branches was due to market conditions, she said.
    "We constantly evaluate the store network throughout the state, and sometimes that involves opening or closing stores," she said.
    Wells Fargo, which has about 100 branches in New Mexico, closed only one office in 2005— it was in Albuquerque at the corner of Montgomery and Pennsylvania NE.
    The bank would not release information on whether there were potential buyers for any of the branches or who they were.