Special Section: Banking & Finance
Banking gains in the Delta
Financial institutions report positive progress despite obstacles

By C. Richard Cotton
DBJ Contributing Writer

Thank goodness for agriculture. It not only feeds this nation and many others, but it keeps the wheels of commerce turning.

Several Mississippi Delta financial institutions have prospered the past few years because of a strong showing in the agricultural arena. Without that upturn in farming, the picture might have been a little less bright.

“We have had two back-to-back, very good years for row crops,” declared Bobby Steinreide, president of the Hollandale branch of Belzoni-based Guaranty Bank & Trust Co. “When that happens, it’s good for business in Belzoni and Hollandale.”

Steinreide reported that the bank has also done well in the Greenwood area. He says the six-office institution has “had healthy growth” during 2004; he added that “profits have been good.”

Smaller community banks like Guaranty, Steinreide pointed out, have advantages over larger multi-state banks but also face challenges fostered by the behemoth operations.

“We have to keep up with technology,” Steinreide remarked. “Young people primarily are demanding electronic banking capability.
“We offer all of it, but they want bricks-and-mortar, too.”

The Guaranty goals are to “stay very involved in the community” and “to offer personal, face-to-face service for our customers who continue to expect that,” says Steinreide. Steinreide also says that personal service is practically becoming a characteristic of niche banking.

But the growth trend is to electronic, online banking and few banks haven’t been forced into that arena. Guaranty is no exception Steinreide said: “Obviously everybody puts pressure on each other.”

Steinreide said the bank’s operational costs have risen because of compliance regulations and implementation of Internet technology. On the flip side, the national Check 21 program, which debits a checking account almost immediately after a check is written and submitted to merchants, has cut the bank’s cost of handling paper since it was started in October.

“Agriculture has a major impact on our bank,” said Freddie Britt, president of Clarksdale-based Covenant Bank. With its other branches in Tunica and Robinsonville, the 4-year-old bank is right in the heart of farming country.

A temporary location in Batesville, opened in October, marks a slight change in Covenant’s focus, Britt noted. The permanent bank is under construction and will open in March.

“It’s a diversification for us,” Britt said. “We feel diversification away from the Mississippi Delta will strengthen us.” He foresees an eventual Covenant presence in Senatobia and Hernando, possibly in three to five years, in an effort to tap the growth spilling over into the “fringes of DeSoto County.”

Britt has solid history to project expansion since the bank has “had extremely good growth in both loans and deposits” during the past year.

“We are continuing to pick up new customers on a monthly basis,” Britt says.

At least part of the reason for that, according to Britt, lies in the fact that Covenant customers are accustomed to the personal service they enjoy; he said bank phones are answered by employees rather than recordings. Customers don’t get voice mail unless they ask for it.

“We can make local decisions here,” Britt said. “We’re only as good as the customers think we are.”

Calvin Dye’s main concern for the immediate future is what he figures is an inevitable interest rate rise: “A rising-rate environment,” said the president of Cleveland State Bank, “puts the squeeze on earnings.”

Dye admits he’s grateful the rates will probably “inch up” as opposed to making a rapid rise. He and officials of other banks watch the interest rate margins, which can be snakebite in the banking industry. You make a loan this week at, say, 5 percent and the interest rate rises next week to 10 percent.

That rise is usually accompanied by increased rates paid to depositors, while the 5 percent loan rate made a week ago remains at 5 percent. Dye said rising rates and a shrinking interest rate margin call for creative revenue-generating innovations.

After a sudden loss of assets last year, in the form of a robbery at the Merigold branch, Dye said that office was closed.

“We determined that branch was unsafe,” said Dye. He hopes to have a temporary facility in place this month, while the new permanent Merigold office should be completed in late spring.

The remainder of the company’s four branches are all in Bolivar County; Cleveland State Bank was founded in 1908.

AmSouth’s Delta presence comprises eight branches in the cities of Clarksdale, Greenville, Greenwood and Yazoo City. Clarksdale’s city president, Bobby Barr, said 2004 was, “overall, a real good year.”

“We have a real good product on the consumer side, our home equity loan,” Barr said of a popular new AmSouth product. He said the recent addition of a 15-year, fixed-rate mortgage has “had a lot of success.”

He also touts AmSouth’s business products; one offers business owners an opportunity to enjoy a host of free services if they maintain their business’ banking functions at AmSouth. Even employees of the business are provided free AmSouth checking accounts.

“If we do our job on the front end,” Barr commented, “they should come to us for car loans (and other services).” He added that AmSouth’s presence in six states is a plus for its traveling customers.

Weldon Aultman, president of the Indianola branch of Planters Bank & Trust, calls the bank’s position in the Delta economy “challenging but manageable.” Planters was established in 1920 and today operates in nine Delta locations.

“2004 has been a good solid year for the bank,” Aultman said. “We had a good farm year.” But he admits that the “ag boost is not what it used to be.”

If there is a trouble spot he sees in the Delta region, Aultman figures it’s in retail: “Our retail customers are struggling.” Unemployment is a big concern in the area.

“Most communities, and not just in the Delta, have lost jobs,” Aultman said. Planters did not pursue any expansions during 2004, instead focusing on maximizing growth in some of the newer communities in which they operate. Aultman expects more of the same for the coming year.

“Interest rates will continue to rise,” he said.

“We have had a great year,” declared Doug Springer, president of M&F Bank. The 35-branch bank is headquartered in Kosciusko but maintains an office in Cleveland. “Loans are up 33 percent in the last 12 months.”

Springer points to the Cleveland branch as being a bright spot in the M&F operation: “We are excited about 2005 but it will be difficult to maintain (that momentum).”

A new account offered by M&F is turning out to be pretty popular, Springer said. E-Rate Plus steers customers toward using the Internet for all their banking needs. Higher interest of 3 percent is paid on balances of $20,000 and higher; there is no service charge unless the customer writes a paper check rather than accessing the account online.

“It’s brand-spanking new, a really good deal,” Springer promised.

He will also continue with the annual Gridiron Campaign, where customers making certain loans during the summer months are given a pair of season football tickets to the Mississippi university of their choice. Springer points out that M&F is the largest holder of season tickets at the University of Mississippi and Mississippi State University.

Scott Carmichael said his efforts for 2005 will focus on maintaining the good year Trustmark Bank experienced in 2004. The Greenville senior vice president is pleased with what he perceives to be a recovering national economy.

“There are great opportunities for small businesses,” said Carmichael.

One financial institution to make some big changes during 2004 was State Bank and Trust, founded in 1898 in Rosedale. Clay McWilliams, the bank’s Greenwood city president, said four of the bank’s Delta branches – Greenville, Clarksdale, Shelby and Webb – were sold to Delta Southern Bank last year.

That banking company is held by foundation-funded, Arkansas-based Southern Development Bank Corporation, which McWilliams said is “better geared to service lower income areas.”

State Bank and Trust also moved its headquarters to Jackson to position it in the state capital and what McWilliams says is a more central location for its marketing focus; he points to 17 branches stretching from Senatobia to Columbia as the bank’s move to “focus on a different market.”

Delta region branches retained are Greenwood, Rosedale and Cleveland.

McWilliams reported the bank is moving outside Mississippi with its acquisition of FirstBank in Baton Rouge. It has also opened a loan office on the North Shore area across Lake Ponchartrain from New Orleans.

“It’s a mature market here, stable,” McWilliams explained about the bank’s move into greener pastures.

Banks are not alone in having reason to refocus. Mike Brister, partner of Blakeman, Brister & Putman Financial Group in Cleveland and Winona, said his clients are realigning their asset-building efforts.

“I’m seeing more money put into the stock market since mid-summer,” Brister said, adding that 2004’s bountiful agricultural year has contributed to a good year for his enterprise.

Like other financial planning firms, Brister’s goal is to provide his clients with investments that will pay off during their retirement years. One group he services, retailers and small-business owners, “are showing greater interest in retirement plans.”

Part of that interest, Brister said, can be attributed to rumbling about the condition of the Social Security system. Threats to make drastic changes in the government retirement program are driving people to explore alternatives.

“And people have more discretionary income,” Brister observed. “As the aging of America goes on, more people know they really need to set up something.

“For 2005, I expect more of the same.” DBJ