Updated

With a name like Bank of America, it was particularly surprising when a branch manager in South Carolina ordered the removal of a U.S. flag honoring a fallen soldier from the bank's property.

Brenda Earls of Gaffney, S.C., tried to honor her next-door neighbor, Marine Lance Cpl. Christopher Fowlkes, who was recently killed by a roadside bomb in Afghanistan, by planting flags along the route the casket would follow. But a Bank of America branch manager pulled the flags from the bank's property, citing "corporate policy."

Bank of America, which has received $45 billion in federal loans as part of the government rescue of the financial industry, apologized for the incident, calling it a "terrible mistake."

"We want to ensure the community knows how deeply proud we are of the men and women who have sacrificed so much in service to our country," the bank said in a written statement. "The bank does fly the American flag at our locations throughout the country and flags were displayed in front of our banking center in Gaffney the evening prior to our dedicated Marine returning home. We deeply apologize for any misunderstandings."

But customers already have begun canceling their accounts in protest.

Earls and Cherokee County Council closed its account, costing the bank reportedly $500,000. If all city officials follow suit, it will cost the bank $1.5 million in deposits.

Earls said the bank's apology was misdirected.

"I think who needs the apology is not me (or) the community, but the family and this young solider who gave his life for us so we all have these freedoms," she told FOX News. "We need to say we're sorry for this young man who gave his life that someone would understand a policy that they could not fly the American flag yet they would send our young people to fight over there in a war."

Earls said she watched Fowlkes, 20, grow up in her neighborhood. Planting the flags, she said, was the least she could do to honor him.

But when she placed one on Bank of America's property, a branch manager ran out of the bank and told her she couldn't do it, she said

"You mean the American flags?" Earls recalled responding.

The manager said policy prohibits the bank from flying any flag, including the American flag.

Earls said the manager told her that the flags might offend some customers.

"The American flags?" Earl recalled saying in utter disbelief.

"This is a financial institution and this is our policy," Earls recalled the manager saying.

While Earls expressed relief that the bank is now flying the American flag, she added, "That one moment in time when they took them down is a sad moment in America."

Larry Di Rita, a spokesman for Bank of America, told FOX News that the incident was a "mistake" that was quickly rectified.

"We apologized to the people involved," he said.

But Di Rita wouldn't say whether the bank has offered apologies to the Fowlkes family.

"We're going to respect the family's privacy and I'm not going to discuss that. Our condolences are to the family and the community of Gaffney. "

Di Rita added that the incident doesn't reflect any policy of Bank of America.

"The fact is we encourage branches to fly the American flag," he said. "We have over 6,000 branches across the country and they do."