On a busy Friday just like any other, the Leroy Bank went bust. A crowd of edgy customers had gathered in the dissipating August heat, waiting for the bank to reopen after the ritual afternoon break. Then a brief typewritten message was taped to the door: “4:45 p.m. … The Leroy Bank (Unincorporated) of Leroy, located in Leroy, Texas, is hereby closed as of August 7, 1987, by order of the Banking Commissioner of Texas.”
That was all. Just a few words, but they were enough to spell disaster to the people of Leroy. The customers stood on the sidewalk for a while, uncomprehending. Then one woman stepped forward and began to rap on the door, demanding her safety-deposit box. She was met by a Texas Ranger, so she retreated. Others cursed or shouted questions toward the stone façade. Gradually the realization began to spread through the swelling crowd that spilled into the middle of the street and over to Billy Bettges’s grocery: The bank had really closed, their money was gone, and they might never get it back again.
Long after the sun had set and the bank examiners in business suits had piled into their cars and driven away, a crowd remained in front of the locked bank. Halfway into the night they lingered, bewildered and angry, hoping for an explanation. One man stormed up to the door and began kicking the glass. Others simply stood there, staring at the bank.
There was one person who might have been able to tell them that night why the Leroy Bank had closed. He was Bill Janes, the mayor of Leroy and the owner of the bank until just three months earlier. His house was not far away. Still, no one had the nerve to walk over, knock on his door, and ask what had happened.
It wasn’t as though the failure of a Texas bank was an extraordinary event in the summer of 1987. Statewide that year, 52 banks went under. But the Leroy Bank was a special case, an anachronism in the age of modern banking, because it was a private bank. That meant that its deposits were not insured. The bank closed, and the depositors were out of luck.
When big urban banks go under, few people are immediately affected. When a bank fails in a small rural town, however, nearly everyone is touched. In and around Leroy, hundreds of people lost their life’s savings. But the devastation ran even deeper, into the social fabric of the community. Friends and relatives turned against one another. The downfall of the bank changed their way of life, shattering the values that had held them together for generations.
A Private Trust
A mile and a half east of Leroy on a scruffy rise that overlooks Tehuacana Creek stands a white board-and-batten house that bears a historical marker. It had been built by W. H. Janes, a Kentucky native and Civil War veteran elected to a term as McLennan County commissioner in 1898. Four years later Janes moved his family to Leroy and backed his son, D.T., in opening a lumberyard. In 1907, in the midst of a national financial crisis, he and D.T. joined three other businessmen to start their own bank in an office at the lumberyard. Later that year they moved the bank into a brick building down the block.
In those days private banks were all over the country, often operating out of general stores or businesses such as the Janeses’ lumberyard. They arose out of the relationship between a proprietor and an employee or customer who needed to borrow money. Typically the borrower would offer some sort of collateral, and the deal was sealed with a handshake. Such an agreement worked best between two people who trusted one another. But as the demand for banking grew, a system with more regulation was required. In 1863, Congress authorized the Treasury Department to charter national banks. Not to be outdone, states soon began issuing their own charters.
But Texas was different. Pressure from farmers and ranchers, mistrustful of large financial institutions, kept the state from chartering banks until 1904. Private banks, oriented toward individual customers, retained their popularity in small communities. Their owners understood the seasonal ups and downs of farm and ranch work. Private bankers trusted their customers and took chances on them, basing loans as much on character as on collateral. Their customers responded with loyalty.
That was the style of banking perfected by the Janes family. Knowing their customers as well as they did, they could make allowances when a payment was late. And when a checking account was overdrawn, D.T. was likely to telephone his customer and leave a friendly message that “the pigs are out of the pen.”
During the tumultuous years of the Great Depression, the Leroy Bank held fast while other private banks went belly-up. As the Texas population shifted to cities, most of the remaining private banks converted to state or national charters. In 1923 the state outlawed new private banks but allowed existing ones to continue.
By that time D. T. Janes had become a man of influence in the community. He owned land all over McLennan County, including a large tract on the northwest side of Waco, where the Lake Air Mall and Lake Air Estates sit today. By 1953 D.T. was in a comfortable position to retire from the bank, and he transferred ownership of it to his son.
Tall, thin, and reserved, Bill Janes assumed control at the age of 37 without a hitch. With degrees from Baylor and Columbia universities, he was better educated and more cosmopolitan than either his father or his grandfather. Janes, like his father, taught Sunday school at the Leroy Church. His lessons were laced with erudition — he would bring a book or a magazine article to elaborate on a biblical theme. He played chess skillfully, wrote poetry, and brought a touch of class to the country bank.