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Small Bank Thrives in Merger Age

April 16, 1998

NEWLAND, N.C. (AP) _ There’s no ATM machine at the Avery County Bank. There are no branches either _ just the main office with its 1950s wood paneling and battleship-gray linoleum.

Bank president Martha Guy’s office has an adding machine but no computer.

All this just three hours from Charlotte, home of NationsBank Corp., and its chief, Hugh McColl Jr., who this week steered his company into a $60 billion deal with BankAmerica to create the country’s biggest bank.

``He has branches that are a whole lot larger than we are,″ the 75-year-old Ms. Guy says with a twinkle in her eye. ``He’s done mighty well. I’m proud of him. But I wouldn’t trade one hour of my life for his.″

But isn’t her bank in tiny Newland (population 650) an anachronism? How, in an age of instant credit checks and multibillion-dollar mergers, does a little independent bank with one office compete?

Very well, thank you, says Ms. Guy.

``We don’t have any bigwigs. Just plain banking. Nothing fancy,″ says the president, a sprightly woman with reading glasses hanging around her neck.

Her father, Edwin C. Guy, founded the bank back in 1913. It has held its own through two world wars and a depression by sticking to the basics _ investing in municipal bonds and making mostly small loans to little people.

``A small bank like this understands the needs of the farmer, the logger. That person in Charlotte don’t know me,″ says Owen Spry, who grows tobacco, Christmas trees and hay in nearby Spruce Pine and has financed everything from a bulldozer to his pickup with Ms. Guy.

He’s not alone in liking the Newland bank. American Banker, a New York-based trade publication, last June ranked Avery County Bank first among the nation’s top 100 community banks in its asset class.

``They have a very loyal customer base,″ says David Hanson, a state bank examiner in Raleigh. ``And Martha Guy is such a unique individual that she has managed to compete successfully against anyone else who has come into the marketplace.″

Indeed, statewide banks have bought out two other local institutions in this Appalachian town that calls itself the ``Christmas Tree Capital of the South.″

Salesman Dennis McClellan does business with those other banks, but he knew where to go when he needed a loan to pay off his taxes.

``They just gave me $6,000, without having to go through the credit apps (applications) and all that stuff,″ he says.

He opened a savings account at the Avery County Bank 31 years ago, when he was 13.

``They loan money to individuals on their past performance and their record and name,″ says Doug Clark, a local tree farmer and one of the bank’s 51 shareholders. ``That’s what a local bank is for.″

Ms. Guy’s style comes from working her way from the ground up.

She was studying chemistry in Chapel Hill when her father called her back to fill in for brother Robert, who went off to fight in World War II. She has worked every position from teller to loan officer _ and still helps take out the trash.

The door to her no-frills office is always open. A pink sign on the doorknob reads, ``Hugs ... Welcome Friend.″

That personal touch is what will insulate banks like Avery County against the megamergers, says Kenneth Guenther, executive vice president of the Independent Bankers Association of America in Washington.

Guenther says these mergers are opening up niches for smaller banks and eliminating some of the competition through branch closings.

``I think the banks that are already in the market will get business from disenchanted consumers, disenchanted small businesspeople,″ he says. ``And there are a lot of them.″

Ms. Guy still worries. A child of the Depression, she has vivid memories of the stock market crash and President Franklin D. Roosevelt’s national ``bank holiday,″ after which many banks never reopened.

She, her four sisters and her brother maintain a controlling interest in the bank. She says she has had offers to sell it, including one just six months ago. But she has resisted them.

``I’m going to have to someday, but I try not to think about it right now,″ she says.

Guenther says the big challenge for the Avery County Banks out there will be finding ways to compete with the Citicorp-Travelers of the world _ which are dealing in banking, insurance and securities. Ms. Guy has made some adjustments.

Avery County Bank last year started offering senior citizens no-charge direct deposit accounts for their government checks. And she’s looking for a place to put an ATM.

``The younger people demand them,″ she says. ``It’s not going to be this year. Maybe next year.″

___

EDITOR’S NOTE: Allen Breed is the AP’s Southeast regional writer, based in Raleigh, N.C.

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