Hometown Banks Help Assure 
a Rich Future for Greater Durham

Durham may not rival New York, Charlotte or San Francisco as a financial center, but it what it lacks in size and volume it makes up for in sheer longevity, small-town service, cutting-edge products and a commitment to diversity.

Once home to dozens of small banks that cropped up to serve the booming tobacco market of the first half of the 20^th century, Durham today is still the headquarters of three homegrown banks: Mutual Community Savings, Mechanics and Farmers and Central Carolina Bank (pictured at left), which has maintained its headquarters in Durham despite a recent merger. It also is the chosen location of the proposed Cardinal State Bank, which, pending approval of its charter, would be the first new community bank to open in Durham County in 25 years.

Banks historically have been attracted to cities and towns on the rise, and so it was with Durham. In the case of Central Carolina Bank, at 98 the oldest of the home-grown banks still in existence, businessman John Sprunt Hill saw an opportunity to serve owners of small farms as well as the county's prosperous businesses and their employees, including the tobacco interests that spurred generations of growth. The company he founded in 1903, Durham Loan & Trust Co., initially focused on insurance and real estate work, but added a banking department in 1915. The name was changed to CCB in 1961, during the tenure of Hill's son, George Watts Hill, who chaired the corporation until his death in 1993. CCB's growth strategy centered on opening new offices in the Piedmont and acquiring other banks, all the while keeping a sharp eye on the city whose skyline it helped define.

"When you look at Durham, you see our building with our name on it," says Richard Furr, president of CCB and a 30-year veteran of the company. "It continues to be a significant part of downtown and one of the largest private employers in downtown Durham. It's hard to think of Durham without CCB and CCB without Durham."

Little has changed as a result of CCB's recent merger, in which it became a subsidiary of National Commerce Bancorporation of Memphis, Tenn. The bank still employs 1,149 people in the region, most of whom work in the headquarters building on Corcoran Street. Customers of the bank's 208 branches in North Carolina and South Carolina still know the bank as CCB. With a presence in seven southeastern states, the company that now includes CCB has $16 billion in assets. As part of its commitment to Durham, the NCBC holding company headquarters has moved into the CCB building. CCB's charitable-giving and community-service commitment and schedule remains the same, says Furr. "And my office is still on the third floor," he notes. "The first question that (Durham Mayor Pro Tem) Howard Clemmons asked me when he heard of the merger was, 'Where will your office be?’ "

Another integral part of the Durham landscape is Mechanics and Farmers Bank, both for its own 94-year-old history serving a largely African-American clientele and for the dozens of local churches whose buildings were financed by M&F. The bank was started in 1908 by nine African-American businessmen led by R.B. Fitzgerald, a wealthy owner of several brickyards that supplied virtually all the brick used to build Durham's churches and office buildings. Its original location at 112 West Parrish St. was rented from North Carolina Mutual Life Insurance Co., another long-lived, successful Durham financial institution founded by African-Americans. The bank continued to lease space from North Carolina Mutual until 1965, when it purchased a Parrish Street building that the insurer was vacating. (Parrish Street was once such a hotbed of finance it was called the "Black Wall Street.") By that time M&F had grown considerably, having facilitated its merger with the Fraternal Bank and Trust Co., another minority-owned bank in the city's Hayti district. But then as now, with assets of $153 million, 80 employees and eight locations in Durham and surrounding cities, M&F's aim to make all people welcome is a key to its success, notes Lee Johnson, who recently became the bank's ninth president, succeeding Julia Taylor.

"When we first opened, we tried to serve what we saw as an underserved community, including African-Americans and other minorities," says Johnson. "Since 1908, Durham has gone through a tremendous renaissance. We think we have contributed to the community's growth by lifting up professionals and future leaders. And our employees have been able to take back their financial expertise into the community, helping improve economic development."

In an era that has seen the creation of mega national banks, M&F intends to continue carving out its niche even as some of its longtime customers — many of whom represent the sixth-generation of M&F customers in their family — die or move away.

"Technology has leveled the playing field," says Johnson. "We continue to offer the personal touch with the same services of a multimillion bank on the cutting edge of technology." Johnson expects that computer-related services the bank offers, such as Internet banking, online bill paying and forgery-prevention programs for businesses, will help it attract the younger, more affluent customers it needs to maintain its growth.

"We give 20 percent of our net income to local charities such as the United Way," notes Johnson. "The more money we can make, the more we can help our community."

Another fixture in the Durham banking community for eight decades is Mutual Community Savings Bank, both an ally and competitor of Mechanics and Farmers. Organized in 1921 as the Mutual Savings and Loan Association, the bank's start-up capital was a $425 investment by the late R.L. McDougald and its first location was one window in Mechanics and Farmers Bank. The bank moved to its own West Parrish Street building in 1948, and in 1990 it merged with American Federal Savings and Loan out of Greensboro. Two years later, following the upheaval in the S&L industry, the bank's charter was converted to a state savings bank and its name was changed to Mutual Community Savings Bank.

Mutual Community's president, George K. Quick, notes that during its incarnation as an S&L, Mutual was the first such association in Durham to join the Federal Home Loan Bank and Federal Savings and Loan Insurance Corp., underscoring it mission of removing barriers to credit that may have existed for some in the minority community. But because of African-American owned banks such as Mutual Community and others in Durham, home ownership and other attainments of the middle-class was easier for many minority residents here than it was in other cities that couldn't claim a "Black Wall Street," notes Quick. "More available credit helped contribute to the prosperity of area," he says.

Today, Mutual Community has three branches in Durham and Guilford counties and $66 million in assets, and continues to serve its traditional market as its customers and employees continue to serve as role models for young people. "Durham's diversity is unique, and provides an example to all people that if there's an opportunity you want to pursue, there's somebody with your background who is already doing it," says Quick.

For the organizers of the proposed Cardinal State Bank, Durham's rich banking history was one of the attractions for locating here. "Besides, it's home," says John Mallard, one of three employees of the 13-investor group that is applying for a charter for the proposed bank. Mallard, along with fellow employee Harold Parker, is a 25-year Durham resident who worked at CCB before deciding to help create a new bank. Pending regulatory approval, the bank will open in June with Mallard as president and chief executive officer and Parker as chief financial officer.

Mallard and Parker say they saw a need for a community-style bank of the "high-tech, high-touch" variety, where individuals, small business owners and retail business customers are known by name but also can access any financial service the larger banks offer. "If you provide that kind of service, growth will come," says Mallard, who anticipates if the proposed Cardinal bank is successful, it could have assets of $100 million in three to five years and expand beyond its initial two branches in Durham and Chapel Hill.

As the three long-lived hometown banks prepare to celebrate — or count on celebrating — their 100^th birthdays, Mallard and Parker know their proposed Cardinal bank is in good company. "Like those banks, we hope we would be perceived down the road as an integral piece of the fabric of Durham's history," Mallard says. — Suzanne M. Wood