Bank consolidation is hitting home in Cleveland, N.C.

The one-bank town, population about 800, will become a no-bank town next month when BB&T Corp. closes the United Carolina Bank branch that was the last that townspeople have been able to rely on.

"We've always had a bank here," said Cleveland business owner Claudia Register. "It's going to be difficult to maintain the daily things you have to do."

BB&T, a $27.5 billion-asset company based in Winston-Salem, N.C., bought United Carolina Bancshares of Whiteville, N.C., July 1. It plans to close 67 branches by Sept. 19 to reduce duplication of services in many communities and help achieve a $65 million cost-cutting goal.

The closest BB&T branch to Cleveland is 13 miles away, in Statesville, but BB&T is closing the office anyway. It simply wasn't profitable, bank officials said.

Since learning of BB&T's plans to shut the branch, a group of business owners has been soliciting other banks to come to Cleveland, a community founded some 200 years ago as Third Creek. The group enlisted a Georgia bank consulting firm to aid in the search. But after more than two months of recruitment efforts, no banks are biting.

"With bank consolidation on the rise, not a lot of banks are interested in a small community like ours," said Cleveland Mayor Jim Brown.

Cleveland's plight illustrates the dichotomy bankers and their communities are facing between the need to maximize the cost-cutting benefits of mergers and the pressure to continue serving local markets that may not be very profitable.

As major regional and superregional banking companies gobble up small- town banks, local citizenries are increasingly finding their banking options limited. They then question the "community service" images that banks have traditionally projected.

"The almighty dollar is what makes it turn for them," said Mayor Brown. "Banks are not service organizations, they're profit organizations. There is money to be made in a small community, but the return is probably not as high as they want."

Industry observers say banks are becoming more adept at using technology and sophisticated analytical techniques to measure ever more closely where their earnings come from, how pricing and other incentives can make money- losing customers profitable, and where it might pay to cut back on service.

At the expense of inconveniencing some customers, the banking companies' bottom lines get stronger.

"Banks have become a lot smarter about their revenues and costs," said Peter Davidson, executive vice president of Speer & Associates, an Atlanta- based consulting firm.

Fritz Elmendorf, a spokesman for the Consumer Bankers Association in Arlington, Va., pointed out that the total number of U.S. bank branches is on the rise. Community banks are stepping in to fill the voids left by departed regionals, and nontraditional retail outlets like supermarket branches are growing rapidly.

Nevertheless, some communities are simply too small to support a bank facility.

"A branch on average serves 3,000 to 4,000 people," Mr. Elmendorf said. "You don't need too many people to justify a branch. But if it's much smaller and it is not close to any other city, it would be hard to make a case for a bank. I don't know that there is money to be had."

Whether a bank can make money in Cleveland is an issue on which the townspeople and BB&T sharply disagree.

As long as the locals can remember, at least one bank has been there. Before United Carolina there was the Bank of Iredell. Before that, First Union Corp. of Charlotte, N.C., had a branch.

BB&T, which portrays itself as a regional bank with a "truly community- bank posture," has a presence in many small communities throughout the Carolinas. But in Cleveland, the branch was simply too small-about $7 million of deposits-to make it worth maintaining, BB&T officials said.

Their branch, located in a trailer, employed just one full-time teller and one part-time teller. With no loan officer and no sales staff to open new accounts, the branch did little more than cash checks and take deposits.

"It's a small community with very low volume," said BB&T spokesman Bob Denham. "We've decided it makes more sense to move these accounts to a full-service branch where there is a higher level of service."

The lack of a loan officer has indeed been a problem, according to the Cleveland townspeople. They say they would love to do a full range of business with the bank, but they have been forced to leave town for loans and other products and services.

"That was a big problem. They didn't have a loan officer stationed here, and where a lot of banks make their money is through lending money," said Dorothy Fleming, chair of the advisory board for the local United Carolina branch. "If they would have somebody here, it could be a lot larger."

In addition to the small population within Cleveland's city limits, more than 2,000 people work at a semitrailer manufacturer on the outskirts of town. A handful of other manufacturing plants dot the area, providing plenty of potential customers, the townspeople contend.

Nevertheless, BB&T's mind is made up. And some in Cleveland are resigning themselves to life without a local bank.

Clyde Harkey, owner of Community Groceries and Hardware, said he has opened accounts at the First Union branch in Salisbury in preparation for the shutdown of the United Carolina branch. But he is not happy about the 24-mile round-trip drive that awaits him. Business volume requires that he go to the bank once most days and usually twice on Thursdays and Fridays, his busiest days, he said.

Meanwhile, the bank recruitment campaign continues. But the clock is ticking, and more than 10 different banking companies have already turned Cleveland down.

"The consensus of all the banks we've talked to is they don't want to fool with a little town like this," said Ms. Register. "Nobody wants to work for their money. Everybody wants it to fall in their lap."

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