The group yesterday closed five South Island branches, including its facility in Lawrence, which was the town's only bank. It then confirmed it would close its Tiverton St, Palmerston, branch on November 30.
There will be no redundancies, because NZCU South uses Waitaki District Council offices and council staff members conduct its banking services.
Waihemo ward councillor Kathy Dennison said the Palmerston closure would leave the town without a bank.
The decision was particularly disappointing given Waitaki District Council, the Waihemo Community Board and promotion group Palmerston Gateway to Gold all worked hard to bring the bank to the town 10 years ago.
NZCU South chief executive Andrew Leys said declining membership and increasing operational costs meant the branch was no longer viable.
"With increasing use of technology, it has become very difficult to maintain a physical, face-to-face presence in smaller communities."
Mr Leys said the branch's ATM would also be removed, because "there is only very low usage by Credit Union members of the current machine - by far the lowest of any of the 19 ATMs we currently operate throughout the South Island".
Local residents and businesses in the community yesterday said they felt angry and let down by the announcement.
Glenda Mathison said many people would now have to travel to Dunedin to bank.
"A lot of people switched their bank accounts and came over to them when they came here," she said.
"A lot of people are very angry about it."
Waihemo Pharmacy owner Adrian Graamans said he and many residents had been unaware the branch was to close, but it would be a "big loss".
"This town has been under-serviced in banking needs for many years.
"Up until now we didn't even have an ATM machine."
One business owner, who declined to be named, said the bank closing was "definitely an inconvenience".
He also feared the lack of a bank could encourage criminal activity. Robberies could occur if businesses were obliged to carry large amounts of cash, he said.
"Prior to there being a bank here the shop had been robbed a couple of times, but when a bank came on the scene, we haven't had one problem."
Businesses would now be forced to carry large amounts of cash and pay for couriers to take it into the city, he said.
The announcement to close comes just two months after the closing of the only bank in Kurow.
NZCU South branches in Lawrence, Hokitika, Westport, Christchurch and Invercargill were also closed yesterday.
