ROXBORO'S REIGN: A TINY COMMUNITY BANK THRIVES AMONG THE GIANTS IN CENTRAL N.C.

AuthorDykes, David
PositionNC TRENDS: Money talk: North Carolina's financial set

Lifelong Person County residents and empty nesters Bert and Janet Lea wanted to downsize, and they needed a construction loan for a new home on Lake Roxboro. A financial adviser recommended a mortgage broker, but long-distance communication and lots of paperwork discouraged the couple. So they turned to Roxboro Savings Bank, which has been making loans to locals for 95 years. Now the Leas are big promoters of the homegrown company. "It's so odd, because we grew up in this county. We do business here," Bert Lea says. "Why we didn't just think about doing this [in the first place] is probably because I wasn't thinking."

As the financial-services industry consolidates and becomes more technology-driven, some small, local institutions are carving niches based on high-touch, low-cost service. Among the stronger survivors in North Carolina is Roxboro Savings, one of the state's eight remaining mutually owned financial institutions. It has a 37% share of bank deposits in its home county, double the share of rivals BB&.T, SunTrust and Wells Fargo. Roxboro CEO Keith Epstein also says he is "confident" it has more deposits in Person than giant State Employees' Credit Union.

Managers at mutuals don't have shareholders to satisfy because depositors own the institution. Roxboro's assets of $226 million make it a small player, yet the business is profitable. Its 1% return on assets in 2017 ranked 11th among the state's 50 largest financial institutions, according to a Business North Carolina analysis. The capital base of $42 million is more than double the amount required by regulators.

"It's all relationship-driven," Epstein says. "We don't secure business due to advertising or because someone is searching for a financial product online. We have, over the better part of a century, built relationships with other local small businesses, the real-estate community, attorneys and insurance companies."

On a July afternoon, Epstein and colleagues Jane Long, the bank's chief administrative officer, and Derek Green, chief credit officer, visited the Roxboro office of attorney Daniel R. Long Jr. to present a gift certificate in appreciation of the law firm's business. It was a small gesture that bank officials say illustrates why deposit growth has increased 5% annually over the last three years.

Roxboro is an exception in the declining community-bank landscape. The increased cost of complying with regulations and slimmer interest-rate margins between money...

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