The story of Luray, Kansas, is the story of much of banking in rural America, where the business is inseparable from family and community. Unfortunately, many tiny towns in the United States, especially those on the Great Plains, are in danger of dying. If that happens, America will be that much the poorer. Local bankers, such as Luray’s Jack O’Leary, are fighting to keep that from happening.

U.S. Banker Editor-in-Chief Robert A. Bennett visited Luray in 1963, when he was the 22-year-old international editions editor of American Banker, our sister publication. Bennett revisited Luray in May, 2001 to see how things have changed.


Since I last visited Luray some 38 years ago, conditions have changed, but the basics are the same. John O’Leary Jr., who had been the town banker in 1963, died in 1989, but his son Jack recently took his place. Riding in the front seat of a red 1996 Ford Explorer, with Jack at the wheel, is very much like sitting with John Jr. The Irish-blue sparkle that had been in the father’s eyes is in his son’s as well. And the determination to keep Luray alive is as vibrant in Jack as it had been in John Jr.

But saving Luray, and towns like it throughout the Great Plains, is an uphill battle. In 1963, the town was abustle; not, of course, in the way New York pulses, but Luray still had its own high school, grammar school, grocers and a restaurant.

In those days, everyone lived in anticipation of the Thanksgiving Day football game, when Luray played neighboring Lucas. That is no longer because the schools have been combined. The high school, Lucas-Luray, is in Lucas, and the grammar school, Luray-Lucas is in Luray.

The reason for the amalgamation, of course, is that the region has been losing population, especially its young people. Now, some 202 people live in Luray, fewer than the number of people who live in my not-so-large apartment house in New York City. In 1963, the town had 325 residents.

Main Street has an eerie quality. It is broad, but bare. Most buildings are shuttered and only a few cars are parked at the curb. At times, the only movement is a cat crossing a deserted street.

Fears are that if current trends continue, there won’t be enough children and teenagers to justify a local grammar school or high school. And if the schools close, it would mean the death of the communities.

Jack O’Leary, 36, president of what is now the UMB Bank of Russell and Luray, is determined to keep that from happening.

As a result, much of O’Leary’s time is spent finding ways to keep people from leaving Luray and attracting people to it, including Luray-reared children who had moved away. Like his father, Jack O’Leary sees the job of the town banker as assuring the economic health of his community. But in Luray, Jack’s job is harder than it had been for John Jr. because conditions have worsened throughout much of the Great Plains.

The entire region is losing population, partly because huge equipment is reducing the number of people needed to farm, and because the cost of that equipment is prohibitive for newcomers. Also, bigger crop yields have driven down prices, making it that much more difficult for the small farmer to survive.

And the saying, "you can’t keep ‘em down on the farm once they’ve seen Paree," is as true as ever. So, conditions throughout the Great Plains are changing, and not for the better.

In Luray, the change means the local bank — Peoples State — no longer is owned by the O’Learys. Founded in 1934 by Jack’s grandfather, John Sr., Peoples State was taken over in 1992 by Russell State Bank. And, almost simultaneously, Russell State was acquired by UMB Bank of Kansas City, MO.

Today, the Luray bank is a shell of what it had been. Like the Kansas plains, there’s plenty of room to spare. Before it was sold, the bank had about 16 employees. Today it has three in addition to Jack, who spends most of his time at the Russell bank.

In addition to the shrinkage of its staff, the Luray bank, like the town, is less busy. The room that had been used for data processing has been converted into a kitchen.

The bank was jolted in the mid-80s when John Jr. became ill with cancer. His eldest son, Michael, was put in charge and adopted a strategy to force competitors to raise their loan rates, which would have brought them in line with Peoples State’s. As part of that strategy, Mike offered high interest rates, which he offset through the purchase of high-yielding Ginnie Mae paper. Mike had become familiar with money management from previous stints at relatively large banks in Missouri. He left the Luray bank in 1991, partly because of marital problems, and joined the Haskell Foundation, where last month he was named chief financial officer. The foundation finances Haskell Indian Nations University, which caters to the Native-American population.

Although Mike’s strategy wasn’t very successful, it didn’t lose money either. A bigger problem was that Mike didn’t get along well with Mitchell, John Jr.’s middle son, who was the bank’s No. 2 officer.

An outgoing, affable fellow, Mitch, now 45, "made loans to just about anyone who walked in the door," says a Luray resident. Mitch says that’s a bit of an exaggeration and that he was trying to respond to his father’s "focus on keeping the town going." Mitch, who had been mayor of Luray during the decade of the 1980s, acknowledges that he didn’t like banking, and that he entered the business as a result of "family pressure."

Mitch left the area in the 1990s and returned only this year. He has converted the family home into a bed-and-breakfast, and seems much happier doing that than running a bank.

Jack graduated from law school at the University of Kansas in 1991, just when Mike was leaving the bank. The directors immediately named Jack president, and one board member simply said, "there’s the office, go to work."

But the Fed refused to allow Jack to be the permanent CEO because of his lack of experience. It was then the directors decided to sell the bank. But it took about a year to complete the deal, and young Jack ran it in the meantime. According to the staff, he had been making substantial progress.

The buyer was Russell State Bank, Peoples State’s arch competitor. "At least we felt it was a community bank with the same philosophy as ours," says Jack.

And then, shortly after Peoples State was sold to Russell State, and unbeknownst to the O’Learys, Russell was sold to UMB of Kansas City, MO. "We were proud that a big Kansas City bank was interested in us," Jack says.

Jack then left the bank and joined a law practice in Salina. "When I walked out of here that last day, I never thought in a million years I’d be back," Jack recalls. "I felt I had let down my father and my grandfather, the whole town and the area in general. Rationally, I knew selling the bank was the best thing for the town and my mother." Jack’s mother, Ruth, died in 1999.

But Jack kept closely in touch with the Luray bank, calling at least twice a week to see how things were doing, says Maurita Cederberg, a long-time employee and now assistant vice president. Jack also remained active in Luray’s civic affairs.

When Cederberg learned last September that the man who had been president of the Russell and Luray units was retiring, she immediately called Jack to let him know.

Cederberg said she didn’t want to press Jack to take the job, but "he called back in five minutes saying he was interested."

According to Cederberg, "the people in Salina [the regional headquarters] were thrilled," and Jack was quickly named president of the Russell and Luray units last October.

"It was like a dream," says the town banker. "I couldn’t believe I’d be coming back here."

Now he has the chance to redeem himself, if indeed, there’s any real need for that. He is determined to build the bank and restore the town to prosperity.

UMB-Luray has practically all the banking business in Luray and Lucas, Jack says, but his goal is to increase business in Osborne County, which abuts Russell County.

On top of everything, Jack is convinced that the health of the Luray bank will depend on the health of the town, and a great deal of his effort is trying to bolster the local economy. Much of what he does is elementary.

Even before he returned to Luray, Jack stayed active in the town’s affairs. In 1996, when Luray’s lone and dilapidated restaurant was about to close, Jack and farmer Earl Trapp, another town leader, got to work. They figured that the restaurant should be moved from Main Street to the highway, US 281, where it could attract business from passing traffic as well as from the town’s people.

They persuaded the ailing owner of a run-down repair shop on the highway to transfer his lease to the town, and volunteers set about remodeling the building, using funds provided by the town.

Lawrence and Sue Wenthe had always dreamed of running a restaurant, and put up the money for the fixtures. Today, the business seems to be thriving — the liveliest place in town — filled with truckers and local townsfolk, all in love with Sue’s homemade pies.

Luray also lacked a hardware store. So, Jack convinced Joe Dolton, a contractor who builds vacation homes on the government-constructed Lake Wilson, to open a store on Main Street, stocking it primarily with surplus goods from his business. The store doesn’t have a clerk, so townspeople walk in, take what they need, and write down how much they owe. The 51-year-old Dolton, who seems to be the busiest guy in town, scooting from one job to another, plans to hire a clerk in the near future.

But Jack believes the town’s greatest chance is in tourism and hunting. The federal government’s Conservation Reserve Program, known as the CRP, pays farmers not to grow crops. Jack thinks the program is making tourism and hunting feasible. The wild grasses that cover the unfarmed acreage provide a haven for wildlife, which has created a plethora of deer, pheasant, quail and wild turkey.

A big attraction is Lake Wilson, which offers a wide range of recreational activity. It also has been attracting wealthy people to its shores, which keeps contractor Joe Dolton very busy.

In a further effort to attract tourists, Jack is taking the lead in converting a deserted lumber store on Main Street into a museum to display the wide variety of fossils in the area. Ages ago, the Great Plains had been covered by water, and fossils from that aquatic period are rife in the area. The lumber store, built in the 1880s, still has its original hard-wood floors. About 20 volunteers are working to clean and restore the building.

Another attraction is a golf course built by volunteers, led by Greg Heinze, who sells insurance from an office within the Luray bank. The course, built on Kansas’ rolling hills, has nine holes and is being expanded to 18.

But some townsfolk say the CRP has its drawbacks. "This program helps the country but hurts the local economy," says Leonard Brown, a leading rancher in the area and a member of the bank’s advisory board. "People don’t buy fertilizer, they don’t buy equipment, and fewer are employed," he says.

Heinze, the insurance agent, is one of those whose business has been hurt. He sells less crop insurance because farmers needn’t insure crops that don’t exist.

The 58-year-old Brown, who is as articulate as a college professor, says a large part of the region’s problem is it’s too expensive for young people to get into farming. A scholar of government farm programs — which accounts for much of his success — Brown points out that large tractors and combines cost $150,000 and up.

Brown’s sons are likely to stay in Luray because they’ll inherit his property and he can provide the huge amounts of capital needed to run a prosperous farm.

Others also are successful. Among them is Earl Trapp, who was among the leading farmers 38 years ago. The Trapps are pleased that their daughter recently returned to Luray with her husband and are taking over the family’s extensive farm.

Jack O’Leary acknowledges he faces a very tough battle. But, he says with a shrug, that’s life.

"I realized when I resigned from my law partnership in Salina, which is a prosperous town, that it would be a struggle to keep this area viable economically. It’s always been that way, it’s never been easy out here."

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