If you want stories about the importance of bank branches to a community, Dee Jones has them.
Jones, who manages HOPE Enterprises’ credit union in the town of Shaw, has helped customers — they call them members — take out loans for everything from buying their grandchildren new school clothes to paying off payday loans to getting their cars fixed.
One man walked into a HOPE branch to apply for a loan after his truck broke down; another time, she made a woman’s day by approving her for a loan on the customer’s birthday.
“It’s good that we’re here,” Jones said.
It’s good that the branch, which is located on a downtown street that runs parallel to a bayou, is there because communities that lack local banks tend to fare worse than those that do, data shows.
HOPE’s presence in Shaw — the branch opened in April — is important, credit-union officials say, not only because local residents and small businesses can apply for loans. Now that there’s an ATM, locals can withdraw cash relatively cheaply (it’s free for members, the fee is $2 for everyone else) without having to drive to Cleveland or Indianola, assuming they even have access to a car.
Shaw (population: 1,878) has a median household income of $19,487 — almost $20,000 less than the Mississippi average, itself the nation’s lowest. But data show that in poor rural communities like Shaw, having a local bank can help towns avoid slipping deeper into distress.
New federal banking data highlights the impact of losing these bank branches in one of the nation’s poorest regions. Since the height of the Great Recession, 37 percent of counties with persistent poverty in the Mid-South have lost bank branches, according to an analysis by HOPE Policy Institute. Mississippi has lost 55 bank branches since 2011, data show.
Diane Li — HOPE’s Hodding Carter fellow and a senior at the University of North Carolina at Chapel Hill — performed the analysis. She said the closure of bank branches are associated with reductions in local workforce and small-business lending. In addition, the loss of bank branches also means that former customers are more likely to turn to higher-interest alternatives such as payday loans and automobile title loans. The Mississippi Delta has among the nation’s highest concentrations of these businesses.
“You’re more inclined to save. You have a place to put your money and know it’ll be there. You can withdraw money so you don’t need to get a car and drive and get cash,” said Li, who’s studying public policy, of the benefits of having access to a bank account.
The loss of Mississippi bank branches mirrors a larger national trend. In 2013, SNL Financial reported that 1,487 bank branches closed. The research firm started tracking the data in 2002. Banking in small, rural communities can be expensive because of overhead costs. Meanwhile, interest rates, which is how banks make money, remain low.
In 2015, Birmingham-based Regions Bank decided to consolidate several branches and donate four of its branches in the Mississippi Delta to HOPE.
“The decision to close a branch is always difficult and we are especially conscious of how rural and underserved communities may be affected. In the case of the Shaw and Drew branches, we felt that Hope Credit Union was uniquely equipped to provide relevant, holistic financial services to those communities in a sustainable manner,” Evelyn Mitchell, a Regions senior vice president, said in a statement to Mississippi Today.
Ed Sivak, a vice president at HOPE, said Regions also provided cash for startup costs as well as customer lists.
“These are not just places where we conduct financial transaction. We’re a members of the community, we’re investing in these facilities. We put the ATMs in. That’s something that many local people have indicated that would be something of value,” Sivak said.
Jones, the branch manager, said her policy when it comes to approving loans is “not no, but not yet.”
“When I turn down a loan, when I give them the news, I use that as an opportunity to go over the credit report with them and say this is what you need to do,” to improve their financial situations, Jones said.
Jones recalls once rejecting a woman’s applications and helping her write a plan to get her finances back on track. The woman stuck to it, returned several months later and the loan was approved.
Li, the HOPE analyst, said these personal relationships and access to a local bank are critical for individuals and their communities.
“People don’t look at banking institutions as something essential but if you look at rural areas, those are where they’re most needed,” she said.
This story has been updated to clarify the percentage of persistent-poverty counties in the Mid-South that have seen a decline in the number of bank branches since 2011.