Big Banks Meet Small Towns

Neighborhood banks are disappearing. They're being swept up in the growing wave of bank mergers. But in towns across America, customers are asking if bigger really is better. CBS News Correspondent Ray Brady reports from one community in New Hampshire.

There are places in New England like Henniker, N.H., where the descendants of Mayflower pilgrims still live. Henniker has been around for every war of the United States. Now, it's embroiled in still another war: the battle between the old ways and new-style banking.

"I think they've lost touch with the small business needs of this community. They just roll them over, dust in the wind," says businessman Dave Reynolds.

The problems started when a giant bank bought up Henniker's little homegrown bank.

The name of the local bank was Valley Bank. Hattie Edmunds husband, owner of the hardware store, helped found it.

Business owner Bucky Frink says the little community bank had a real down-home touch. "They weren't afraid to loan us money. They knew us because we were local people," said Frink. "My third year in business was very tough for us. I couldn't make my payments. And they helped us manage and get through that period when we weren't going to make it."

But then the Valley Bank was gobbled up by the bigger CFX, which was gobbled up by Bank of New Hampshire, owned by People's Heritage Financial Group, a $10 billion giant. The big chill set in.

Dave Reynolds is a prominent businessman in Henniker. Reynolds says the bank treats him like a nobody. "I own the store, gas station and a laundromat, some office space and an apartment," says Reynolds. "They've been hurting my business and possibly forcing me to close down. The bank has lost checks on numerous occasions."

In fact, the bank sent Reynolds letters of apology for the checks it bounced even though Reynolds had money in his account.

"It was embarrassing and it hurt my business standing in this community," says Reynolds.

The people in Henniker are not alone. Across the country, giant banks keep snapping up smaller banks. In fact, more than 5,000 community banks have disappeared in just the past decade.

"We are now in four states, Maine, New Hampshire, Massachusetts and Connecticut," says William Ryan, president of People's Heritage bank.

Ryan says he tries to keep that local touch. "The closer you get to the people in the community, the better the banking."

And that's just the problem, says Reynolds. The bank is too big, too distant.

When Reynolds insisted on a receipt for his dealings with the bank, he got one but was shocked by what it said. "Here's your (beep) receipt loser." read the receipt.
The bank president was flabbergasted that one of the banks employees would do such a thing.

"I can't imagine that happened the way you're portraying it," said Ryan. "Our employees do a very good job, thy're very responsible people."

"There's no excuse for writing something like that on a piece of paper to anyone in this world," says Reynolds.

Reynolds is suing. And, as the bank merger trend continues to roll on, many in Henniker and in towns elsewhere are now asking if bigger really is better than the hometown touch.

Reported By Ray Brady
  • CBSNews.com staff CBSNews.com staff

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