By Kayla Tausche, Correspondent, CNBC
ATHENS, Mich. – Kellie Lindsey, a lifelong resident of Athens, long daydreamed about having a Starbucks or McDonald's in town -- but a bank? That's something she equates with luxury.
Athens has nearly 1000 residents -- and a handful of home-grown businesses, like the inspection company Lindsey runs -- but no bank branch.
"I would go make a deposit Monday through Friday daily," Lindsey said. "I think it was really taken for granted. Who would ever think that the bank would close?"
Ever since the financial crisis, banks have been paring down, selling off businesses and closing up shop. And even though residents of isolated, rural areas are the customers that use banks in-person the most, it's often America's small towns that find branches boarded up and businesses struggling to regroup.
Southern Michigan Bank & Trust occupied the most prime real estate in town: a corner lot with a costly vault and a handful of customer services used to help residents in town with accounts and loans. It closed in 2011. The bank's chairman and chief executive officer John Castle said in a letter that the financial crisis had hurt business in Athens, and the amount of loans and deposits had started to decline. The decision wasn't easy, Castle wrote, and "unfortunately, not every small town or village can financially support a bank."
Now that the bank has closed, foot traffic has fallen noticeably, Lindsey said as she surveyed the town's main intersection. "This town was a lot busier. It looked a lot different than it does today.”
Losing the local branch means more than an empty lot. For small towns, it brings rising challenges for a town's business. Lindsey says she now spends thousands of dollars each year driving to the branch in Battle Creek, and paying for security to protect the cash that now stays in her storefront overnight. Sherry Hanson says her restaurant, the Copper Kettle, sees its business day interrupted frequently by the burden.
"There have been times when we've called other businesses in town," Hanson said. "Like, 'Hey you got any fives? Hey you got any tens?'"
There are nearly 10 times as many bank branches as Starbucks shops in the United States, but they are becoming less of a necessity. In 1980, 95 percent of households used a bank branch, according to consulting firm AlixPartners. That number is only 50 percent now.
The culprit, said Debbie Bianucci, president of industry group BAI, is online and mobile banking.
Consumers can do more transactions without a teller, so banks have been trimming the number of branches they have open. For three years, banks have been closing more branches than they’ve opened, shutting down more than 2,500 in 2012 alone. And data from SNL Financial shows small-town branches are sacrificed in favor of those in big cities. More foot traffic brings the potential for higher revenue.
Several towns, such as Alburgh, Vt., Six Mile, S.C., Donora, Pa., and Fountain City, Ind., have figured out how to fare without a local branch throughout the years -- and some have resorted to desperate measures to lure one back.
Alburgh and Six Mile both lobbied local credit unions to set up shop in the bank's stead. Six Mile even offered to slash rent in the building to make the move more appealing.
MainSource Bank, the last bank standing in Fountain City, closed this spring, citing the pressure of being a publicly traded company as well as the costs of regulation.
Residents didn't go down without a fight. Some 600 - a majority of the town - petitioned to keep it, but in the end, only the ATM was left.
"I don't know how businesses normally survive outside of having a bank in their town," said John Roberts, who runs the mini mart. "I'm assuming we're going to find out in the very near future."
Family Diner owner Paul Ewen worries about the town’s survival.
"You take some of these smaller towns like Fountain City and the banks and things move out and the next thing you know, there's just a ghost town," he said.
Basic tasks become more inconvenient, said Larry Stegall, Fountain City's town council president.
"A bank is vital to a town just because it's kinda like the heartbeat of the town," Stegall said. "But yeah, we're not gonna roll up the sidewalks cause there's no bank here."
In Athens, residents used to go by the old bank, now occupied by Dave Enders' collectible coin shop. Enders says he wishes the town had a bank -- now he uses the vault to hold valuable inventory. As the new reality sets in, fewer residents come by to inquire about where the bank went.
"Some of them get very angry and walk away swearing," Enders said. "I can hear them through the walls."