KEYSTONE — The year 1999 was a landmark for the small McDowell County town of Keystone. Labor Day weekend of that year, dozens of agents from the Federal Deposit Insurance Corporation flocked to the town to investigate fraud at the First National Bank of Keystone, where millions of dollars were lost and where local families learned money they’d been saving for years was gone for good.
“When that bank shut down, it was like the end for us,” said former Keystone mayor Elwin Thomas. “There was nothing after that. It was a treasure for this town, then it was just gone, and it felt like all the good things went with it.”
When it came to light that there was a $515 million discrepancy between the bank’s books and what it was reporting to the office of Comptroller of Currency, the FDIC stepped in, with no choice but to shut the bank down for fraudulent practices.
More than 70 agents from across the country were sent to the town with less than a 12-hour notice to pack their bags, board a plane and get to the bank. They didn’t know what they were walking into, or how long they’d be there.
Three of those women — Lesylee Hodge, Diane Chatfield and Lynette Martin — spent three weeks in Keystone, holed up in the upstairs office of the bank where they met with depositors, breaking the news to them that money they were keeping there would never come back to them.
They found their time in Keystone a mix of exhausting — due to long hours and emotionally draining work — and genuine. Despite their brief time there, they connected with the residents and were so touched that this year, 20 years after their first and only visit to the place, they came back.
“When we think of our time here, what really resonates is the sadness,” Hodge said. “Sometimes I can’t help but cry when I think about it. The people here were good to us, especially considering the circumstances, and they were victims of this situation completely out of their control, but they dealt with it. Nothing has stuck with me the way [Keystone has].”
Now retired from the FDIC, the women are still close friends and meet up regularly in their respective cities when they get the chance. The idea for a visit to Keystone came last year, when they were in California.
“We started talking and it was clear, I think to all of us, how much the place still meant to us,” Martin said. “There were definitely some tears — there still are.”
They were curious what the town was like today, and how it was fairing. They wanted to know what happened to the families they helped, some of whom they kept in touch with long after the initial closing. So, they bought plane tickets and booked a hotel in Princeton — where most of them stayed during their first visit.
Leaving on a Friday morning, they drove the same roads they did in 1999, this time in the daylight as opposed to their trips then, which were usually before sunrise and after sunset. The windy roads leading to Keystone from Princeton awoke memories in the women — a state trooper on Rt. 52 led to stories about the state police who were charged with guarding the bank while they worked. The houses built in the hillsides reminded Martin of how some of the families she worked with described their homes.
As they drove through Northfork, they pointed to the old middle school, remembering when there was a community meeting held there about the closing.
“It was weird, because I had to talk,” Hodge said. “Fifteen minutes before, no one was there, and we didn’t think anyone would show up, then out of nowhere the gymnasium filled completely. Everyone was curious, obviously, but they were also so open about what was going on, about their personal worries.”
People would raise their hands, Hodge said, and ask how much money they had left in the bank. They spoke loudly with their neighbors about it.
“It was unlike any closing I’d ever been to,” Martin said. “You could tell this was the type of town where everyone knew everyone, and they were going through this together. There were no secrets.”
The women’s day-to-day in Keystone was meeting with those who were storing money in the bank and explaining to them how much they would be losing because, through the fault of the bankers, Hodge said, the money wasn’t insured.
“These were people that were so humble, and they never got angry, they nodded along and just listened,” Martin said. “They’d come in, hands black from black coal dust. Some of them had money from black lung settlements. Others from what family left them. A lot of it was gone. It was money they said they were going to use to send their kids to college, to get them out of the area, and then, in a day, that wasn’t possible anymore.”
Today, those kids would be at college, or perhaps already graduates. As Martin considered that, she shook her head as Hodge drove the minivan, almost to the former bank, which is now Keystone’s city hall.
“I wonder how their lives would have been changed if some banker hadn’t messed with their lives,” Martin said. “Their whole lives. I think it hurt to see that poverty level and to know that some individual thought it was their right to deprive these people of what little they had.”
For residents at the time, the First National Bank of Keystone brought opportunities to the town that were lost when coal mining activities died down in the area. For three years in the 1990s, the bank — a billion-dollar institution at one point — was named the most profitable community bank in the country by American Banker.
When the fraud was revealed, people keeping their money there from as far away as California were shocked to learn how small the community surrounding Keystone First National Bank really was, the women said.
“They’d call and they’d say, ‘You mean a billion — a billion — dollar bank was in this town?’ ” Martin said. “They had no idea — we didn’t have the internet then, you know. There was no way to Google these things and see it. But I think we had the same reaction when we got here, and saw the town.”
The first thing that stuck with them in 1999 was the poverty.
“One of the things that really bothered me was that we help all these other countries and yet we’ve got this whole area of poverty stricken people right here in the U.S.,” Chatfield said. “Why aren’t we helping them?”
For Martin, it was an enlightening experience and changed the way she thought about the world around her.
“I just didn’t realize — maybe my eyes were closed, but I didn’t realize there was so much poverty still out there, and poverty that could have had something, but then poof. It’s gone because the money was gone,” Martin said. “I’ve never forgotten that. I don’t think I ever will.”
Twenty years later, as they drove into Keystone, they were reminded of the poverty again.
The last two decades have been difficult for the town. There are only three businesses in its limits: a doctors office, a hardware store and a gas station. Town officials say they rarely receive the Business and Occupation taxes they’re owed, which — even if they were paid — would only amount to a fraction of the $90,000 the bank paid quarterly before it closed.
There are persistent water issues for residents, which are hopefully going to be corrected in coming years when a project is completed to replace the town’s service lines and hand over operation of the water system to the McDowell County Public Service District. Until then, though, people live days, sometimes weeks, with no water. Most residents, according to mayor Vondalere Scott, do not pay their water bills, which means even less revenue for the struggling town.
When the women heard these stories from Carlotta Young, a community activist and Scott’s sister, they were somber.
As Hodge recounted their experiences in the town to Young and Thomas, who they ran into in the parking lot behind city hall, she teared up. They exchanged stories about the bank — Thomas’ wife worked there in the ‘90s, and he remembered it as a cornerstone of the town.
If people didn’t work there, they benefited from its leaders’ philanthropy, he said. All in all, Thomas conceded, it was probably too good to be true.
“It didn’t always make sense, but we didn’t want to question a good thing,” he said.
Young was a depositor at the bank. It’s where she opened her first savings account. Since her money was insured, she didn’t end up losing anything in the failure, but she remembers people who did.
“It was a whole commotion, and I think a lot of people just had a lot of questions,” Young said. “It’s not every day something that big happens in a place like this.”
Today, in light of Keystone’s hardships, Young spends her time trying to invest in the small city. She leaves potted flowers at the town buildings and property. She recruited a missionary group to paint the once rusted water tank that sits on Rt. 52, right at the entrance to Keystone.
Most important to her, she is starting a community nonprofit to help children in town, called We Are The Teachers (WATT). She plans on taking over the old Head Start office, which closed last year, and creating a program for 5-12 year olds.
“We need something here to help the kids before high school, before they make those bad choices, and that’s what this is going to be. We need to invest our time in them early, and show them we care, that they have a chance and we’re going to make them see it,” Young said. “It’s just starting out, and we’re just getting going, but it’s going to work.”
As the women heard about Young’s mission in the town, they sat at a table in city hall, right in front of the former bank vault, which is now used for storage. They leaned in and listened intently, nodding along with Young.
The women didn’t come to Keystone empty handed. Before their trip, they reached out to other FDIC agents who were stationed in Keystone and began a fundraiser to raise money for a community group. They didn’t know where the money would go when they got to town, but Young’s vision sounded promising.
Hodge sat at the head of the table and quickly made a $500 check out to Young.
“We really care about this town, and we want this to succeed, so this is to help make that happen,” Hodge said as she handed the check to Young.
This was the first donation Young received for WATT, and she said she hoped the women kept in touch to see progress for the project.
“It’s not usual to have visitors to Keystone, really ever,” Young said. “It’s even less usual for people to come back because they care so much. For a lot of us, that’s why we stay here — we’re committed to this place and want to make it better. [Hodge, Chatfield and Martin] are a part of that now.”
A few hours later, after grabbing lunch in Welch, the women were on their way back to Princeton. In the morning, they would leave for the airport to return to their respective states — California, Arkansas and Ohio.
As Hodge drove, they considered the visit.
“I think we’re going to come back,” Hodge said. “Maybe next year, see how [WATT] is doing. This is a place, I think for all of us, that we’re never going to forget. It’ll always be in the back of mind.”