Recent reduction in borrowing costs along with available capital add up
Mississippi has experienced unprecedented industrial and business growth in the past year, and the projects have been widely distributed across the state. Any time state leaders announce another major development project, it provides growth prospects for businesses in those areas, said Hancock Whitney Bank Senior Vice President and Metro Jackson Market President, Leigh Pace.
“More jobs create better opportunities for both the existing business community as well as ancillary economic development near those same areas,” said Pace. “Central Mississippi continues to explode with new, major development announcements; and now, other parts of the state such as Gulfport, The Golden Triangle, Senatobia and Meridian are seeing equally impactful developments that are creating thousands of jobs.”
Pace said access to capital remains very strong in the footprint which Hancock Whitney serves. The bank is seeing business and consumer confidence grow as interest rates are easing during this recovery period.
“As business and commercial activity increases for both regional and privately owned businesses, everyone benefits from the tax revenue generated in those areas,” said Pace. “Small business continues to be the staple of many Mississippi communities; and while they need access to capital, they also need a growing tax base to remain successful. New developments and new jobs provide that additional tax base that many communities need.
“With a growing tax base and more jobs available to our workforce, business owners are in the position to take advantage of the expanded needs in their respective industries. I believe Mississippi’s banks are positioned to help their clients grow their business.”
Pace said many government-backed programs like those provided by the Small Business Administration are helping the small business community grow their companies and provide that capital needed to service the additional jobs created.
“The banking community here in Jackson and across our state is committed to helping grow small business,” Pace said. “At Hancock Whitney, we understand the needs of our business community, and we stand beside them ready to provide that partnership they need to be successful.”
Headquartered in downtown Gulfport, Hancock Whitney Corp., founded in 1899, operates 179 financial centers in Mississippi, Alabama, Florida, Louisiana and Texas. It has a net worth of $35.8 billion.
Scott Cochran, Chief Core Banking Officer, Renasant Bank, said the record-breaking amount of new development projects announced such as Amazon data centers are tremendous for the state overall. Cochran said while they do not provide a great deal of direct opportunity with the named economic project owner, they do spurn significant opportunities for tier suppliers and the construction firms developing and constructing infrastructure.
“With many of these types of projects, the true economic boom is felt in the 12-to-24 months following the completion of the major facility,” said Cochran. “Overall, the economic environment in Mississippi is pro-business and provides a great deal of optimism for growth and prosperity for both customers and banks alike.”
Currently Renasant does see any unusual business challenges unless the business has been impacted by the government funding impasse or by foreign trade and tariffs. Cochran said these tariffs are now a part of their cost of doing business.
“Competition among banks remains intense, with all major projects requiring highly favorable term sheets,” said Cochran. “In these cases, some banks often accept lower margins today, relying instead on the strength of their relationships with customers rather than immediate earnings from the credit facility.
“Regarding business opportunities, the current administration has fostered a sense of optimism about economic growth and expansion, and companies appear to be more inclined to make capital investments under present conditions.”
With the recent reduction in borrowing costs, most Renasant Bank customers view this as the beginning of a “falling rate environment” which is a positive for expanding business–whether it be short-term or long-term borrowings. “Most customers have shifted their mindset from fixed rate requests to variable, as they desire to ride the borrowing curve in assuming the possibility of future rate reductions,” said Cochran.
Renasant Bank, headquartered in Tupelo, a 121-year-old financial services institution with assets of approximately $26 billion, is a regional powerhouse with more than 280 offices in Mississippi, Alabama, Florida, Georgia, Louisiana, Tennessee, North Carolina and South Carolina.
As far as access to capital for small business, it is business as normal, said Jim Quinn, Executive Vice President/Chief Banking Officer, Planters Bank & Trust, Indianola.
“Small business credit is good in general and we have been in a long stretch with high credit quality,” said Quinn. “Small businesses are our bread and butter. They are some of our larger depositors and they keep our local community going. We have a strong capital position as a bank and we are looking to loan money. One good thing about living in more rural areas is we read about problems in metropolitan areas of the country, but a lot of times we don’t experience it. When you hear about things like office building vacancies or vacancies in multi-family, a lot of the time we don’t have the same credit problems as larger banks.”
Quinn said when credit history is good, access to capital is good. And he said Planters Bank & Trust has been on a ten-year run with really good credit in small business lending — companies with $10 million in sales or less.
“The interest rate environment is easing up,” said Quinn. “The cost of funds are going down so the rates we are lending out capital for are going down. Anytime that happens, it is good for small businesses. In a falling rate market, small businesses begin to expand. When that happens, loan activity increases. When rates skyrocket like they did a couple years ago, that is no fun for anyone, a banker or a small business.”
Planters Bank & Trust is accustomed to the fact that farming revenues go in cycles. As an ag lender, the bank is prepared to weather those cycles. But there hasn’t been a three-year cycle of farm losses such as being seen today since the 1980s.
“A well-capitalized producer can stand two years of losses, but three years of losses are hard to withstand,” said Quinn. “Based on commodity futures today, we could be looking at a fourth year of losses.
“So far, though, the profitability of the individual farmer has not affected land prices. That is good and bad. It is good that so much of the wealth of the Delta is concentrated in row crop land, but bad because the average farmer is paying rent based on the ag economy of five and six years ago. What we are seeing now is the farmers who have been at it for a long time are asking themselves, ‘Is this really worth it?’ We’re seeing more farmers saying this is going to be their last year.”
For people who have assets in CDs or other investment vehicles, bank rates are down for deposit accounts from where they were even six months ago and down considerably from where they were two years ago.
“But in general deposit and loan rates fluctuate at about a three-point range, four to seven percent, and we are still in those ranges,” said Quinn. “So—barring a global situation—I do not believe we will see Fed Funds under one percent like we did a few years ago.”
Planters is a 105-year-old bank with $2.1 billion in assets that has 22 locations stretching from Memphis to New Orleans. The majority of the bank’s deposit base is in the Delta.