When a merger threatened the only bank branch in tiny Barnes, Kan., many of the town's 180 residents mobilized to save it.

At stake, to many townsfolk, was nothing less than their community's economic future.

Although a letter-writing campaign that reached the Federal Reserve Board failed to save the branch from closing, the uproar persuaded a second bank to buy and operate it.

"I think, all in all, even though we lost, we lost and won at the same time," said Barnes Postmaster Jane Sedlacek, who organized a petition against the closing.

Barnes' saga exemplifies the fears of many small towns. Clinging to a limited commercial base, residents can't afford to lose a staple such as its only bank office.

Earlier this year, Community Bancshares of Marysville announced plans to acquire Community State Bank in Hanover, which operates the branch in Barnes.

Because it has another office six miles away in Waterville, Community Bancsharesdecided to close the Barnes office, which had $4 million in deposits.

Many of the town's 180 residents - who rallied last year to keep afloat one of its two eateries, Hometown Cafe - didn't want to lose their only financial institution.

Ms. Sedlacek collected about 120 signatures pleading for the office to remain open even on a part-time basis. Several townspeople also wrote to the Federal Reserve Board protesting the closure.

Residents argued that elderly people would have trouble reaching other offices, and government entities in the area wanted to keep their deposits in Washington County - Waterville is in Marshall County. Residents also said local business would suffer and crime could rise if merchants kept more cash on hand.

Regulators considered their pleas, but the Federal Reserve Board last week approved the merger application.

In the meantime, Art Nease, who owned the Barnes bank for 30 years and sold it to Community State in 1992, had sought a bank to reopen the jeopardized branch.

The $11 million-asset Bank of Palmer, about 18 miles away, signed on last month and received Federal Deposit Insurance Corp. approval Saturday. State approval is pending, and the bank hopes to open the office Aug. 1, after buying the existing building and hiring its two employees.

"The people in Barnes here felt very strongly about trying to keep the bank and their town alive," said Debbie Kruse, who has worked in the branch since 1979 and who would manage it under its new owners.

Kirk Bradford, president of Community Bancshares' Citizens State Bank of Marysville, said the extent of the protest surprised him but the underlying sentiment did not.

"A real small town ... still has a lot of pride," said Mr. Bradford, who held a town meeting in Barnes this month about the acquisition. "I know it's still handy just to walk across the street."

But, he said, about 20 banking institutions exist within 25 miles of Barnes - and residents must go to other communities anyway for certain business and shopping not available in Barnes.

Bank of Palmer, however, felt that the town's cries signaled a real need for local banking services.

"I think it'll be a good move for us," said president Bruce Meyer, who expects to garner about 80% of the branch's former business.

Although Citizens' Mr. Bradford concedes that he will lose some of the Barnes business, he said his bank will promote its services such as automated teller machines and larger lending limits to former Community State customers.

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