New regional bank aims to grow Appalachian economy
MORGANTOWN -- Mike Hurley had a great opportunity: He could multiply sales and staff by converting his metal-stamping business from one that made brackets for the automotive industry into a top-tier supplier of satellite dishes to DirecTV.
He also had a problem: Highlands Diversified Services is headquartered in small-town Appalachia, a place where big banks readily lend money for houses, cars and refrigerators but shy away from business loans. Louisville, sure. But not London, Ky., population 8,000.
"There's a stigma in Appalachia that says, 'You're profoundly rural, you're profoundly uneducated and you're remote, and we're not going to spend the time to get in there and provide you the financing,"' said Ray Moncrief, who stepped in with a $6 million line of credit through a local community development fund, the Kentucky Highland Investment Corp.
Lenders like him, determined to improve the economy one small business at a time, are about to get a big boost. On Friday, the Appalachian Regional Commission is announcing the formation of a new central bank to serve them, a go-to source of money called Appalachian Community Capital.
It's being held up as a model for other underdeveloped regions at the Clinton Global Initiative conference in Chicago, where ARC said it will invest $3.4 million to get the central bank off the ground. It's firming up commitments for another $39 million from philanthropic foundations, public investors and large commercial banks.
Over the next 24 months, ARC plans to leverage $233 million in private capital to create a projected 2,200 jobs in the 13 states the commission serves.
ARC is a state-federal economic development partnership created by Congress in 1965 to help build sustainable communities in a region beset by poverty and poor health. Its mission is to grow job opportunities and income, bringing Appalachia to parity with the rest of the nation.
The program should help lenders such as Moncrief support their communities.
"The old community banker would say, 'Your credit score isn't so good, Joe, but I knew your daddy and your granddaddy, and we need your business here in town.' That's what we do," Moncrief said.
"We have stepped into the shoes of the old-time community bank," he said. "We look at companies that aren't quite bankable."
And Mike Hurley is grateful for that.
Today, Highlands Diversified Services has 260 employees, about 80 more than two years ago, and it's cranking out 2 million satellite dishes a year.
"Like most parts of eastern Kentucky, jobs are really, really needed here," Hurley said, "and it's been a good thing for the community and a great thing for our company.
"You always have to reinvent. The needs change. The expectations of the customer change. The world economy itself changes."
But reinvention, Hurley said, requires money.
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