Two community banks are shedding in-store branches that they say brought in too few loans to be worthwhile.

Last Friday, Community First Bank of Carrollton, Ga., said it will sell three of its four branches in Wal-Mart stores to First Citizens Bank of Newnan, Ga.

And earlier last week, Community Trust Bancorp of Pikeville, Ky., said it was seeking a buyer for all five of its supermarket and Wal-Mart locations.

In-store branches have been popular in recent years, growing to 9% of the nation's bank offices from 0.7% a decade ago, according to a recent study by Mentis Corp. of Durham, N.C.

But though such branches cost less, Community First and Community Trust said the ones they are selling produced almost no loans, and so added little to the bottom line.

"No one goes to Wal-Mart in search of a loan," said C. Lynn Gable, chief financial officer of $415 million-asset Community First.

To make the store branches worthwhile, the bank would have to add branches in surrounding areas, Mr. Gable said. Instead, he said, "we decided to get out."

The buyer already has branches in surrounding areas, he added.

Community Trust, which has $2.2 billion of assets, said it was "flush with deposits" and so did not need the in-store branches to gather more.

Both of the banks selling branches have special reasons to cut costs. Community Trust is restructuring in conjunction with a $7 million chargeoff on soured loans. And Community First, which recently converted from a mutual thrift to a public company, is trying to improve an efficiency ratio now hovering near 70%.

"We opened these branches at a time when size was the most important thing, with less regard to cost," Mr. Gable said. "We are seeing the world from a new perspective now."

Michael L. Reddoch, president of National Commerce Bank Services Inc. in Memphis, insisted that the experiences of these institutions are exceptions, not the rule.

Mr. Reddoch's company owns First Market Bank, which operates out of Ukrop's Super Markets locations in the Southeast.

With the right mind-set, banks can make loans from in-store branches, he said.

"Bankers need to be trained to go out into the aisles and talk to customers," Mr. Reddoch said. "People don't walk into a store and say, 'I need to borrow money,' but that need exists."

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