Keith Epstein, right, succeeded Jane Long as CEO of Roxboro Savings Bank last year. Long remains chief administrative officer. The mutually owned institution is the deposit market share leader in Person County. Photo provided by Roxboro Savings Bank.
By David Dykes
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 collected on loans and paid on deposits has pushed others out of business, Epstein says. But his institution sees lots of opportunity to grow, with plans to improve its digital offerings next year, making it easier for customers to bank using tablets, smart watches and phones.
“There’s finally a recognition that we’re going to be a lot worse off if there are no community banks,” he says. “We want to demonstrate there is a place for small, mutually owned institutions.”
Epstein, 47, was born in New Jersey and earned a bachelor’s degree in 1993 at N.C. State University, where his parents attended. He went to work for Hillsborough Savings Bank (now SunTrust as a result of multiple mergers) and later worked at a few other community banks in the northern Triangle region. Seeking more stability, he joined Roxboro in 2014 as a lender and was promoted to chief credit officer. He became CEO last year, succeeding Long, who had the job for 14 years.
Roxboro Building and Loan opened in 1923 on the second floor of the town’s Cotton Mill Building, above a post office. In 1962, the name changed to Roxboro Savings and Loan and in 1992, Roxboro Savings Bank. The business, which employs 30 and has 11 directors, is benefiting as Triangle growth sprawls northward, enabling the bank to do more business in Durham County. Roxboro is a 40-minute drive from downtown Durham.
“We embrace who we are,” Epstein says. “If you had all the money in the world [and] you were going to build a new bank, you could have a fantastic capital base, you could have the finest facilities, you could advertise like nobody’s business, you could do customer giveaways, you could do whatever you wanted. But what you can’t do is build up the trust and the reputation that we have over 95 years.”