Financial institutions have been abandoning American smaller towns in striking numbers over the past decade, presenting a significant economic challenge in the communities they serve, according to a report from Bloomberg.
More than 1,500 bank branches shuttered between 2012 and 2017, according to a recent Federal Reserve report.
Allendale, South Carolina, a modest but previously healthy small town, has felt the economic pain of losing multiple bank branches.
Infamous in national news for an uptick in violent crime, Allendale received a positive media boost from Democratic presidential contender Pete Buttigieg’s recent visit to increase support in the town’s African-American majority.
Allendale County is among 44 “deeply affected” counties that lost half or more of their bank branches, according to the report. Allendale had lost a small community bank in 2014 after it failed, leaving it with a single traditional bank, called Palmetto State, as well as with SRP, a local credit union.
Allendale’s mayor and a councilwoman say they met with an SRP official who was concerned about crime in the area, dissatisfied with the branch’s location and worried about employees’ safety. Bill Robinson, a county councilman, said weak business at the site was a problem. Ultimately, the parties couldn’t agree on a new location. SRP consequently left Allendale.
Locals say they still appreciate the one bank left, Palmetto, but the credit union was especially willing to make loans to low-income people and required only a $200 balance on some checking accounts to avoid charges. Locals currently rely more on the town’s lone grocery store, buying a one small item, e.g., a pack of Doublemint gum, and seeking big sums of cash back.
Wayne Brown, the grocery owner, says these small purchases hurt his business, as the debit transaction fees often outweigh the actual sale. Residents are maxing out cashback options from their Social Security debit cards, he said.
Many in rural communities rely also on private ATMs in convenience stores, although most don’t allow for deposits and the withdrawal fees combined with any bank charges are a “meaningful cost burden,” the Federal Reserve report says.
The loss of legacy financial institutions is just one among Allendale’s multiple struggles. In addition to crime, student test scores in 2017 were so low that South Carolina’s education superintendent declared a state of emergency and took over the school district. In October of this year, Georgia-Pacific LLC idled an Allendale plant that employed about 140 people.