Opportunity in Rural America
Responsible and responsive credit and capital provided by financial institutions are the fuel that lights the fire of economic growth in this country, and without it, the fire goes out. Unfortunately for many rural communities, that fire is fading due to many community banks either closing or consolidating with larger financial institutions. When that happens, it not only means that the door is opened to predatory lenders, but also that the friendly faces in the bank disappear, along with the relationships that enable capital access.
In many areas, lending decisions have moved into centralized, urban offices often hundreds of miles from a community. In these offices, away from the main streets and dirt roads, applicants become little more than numbers on a spreadsheet, and without the personal relationships, knowledge, and stories, loans are more likely to be denied and capital access more likely to dry up. This is the threat facing rural America.
As other banks leave rural communities, we continually seek opportunities to expand in their place and bring our unique brand of financial products and services to those who seek to improve their lives. We have proven that these communities are eager to light their economic engines, they just need the financial spark. The following case studies show the net loan growth for three recent acquisitions both pre- and post- acquisition in an effort to illustrate our ability to turn challenges into opportunities.
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The northeast Arkansas community of Blytheville is both a representation and contradiction to many Delta communities. While it has benefited from the presence of major industrial employers involved in the local steel industry, this community has also been wrought by low wages, high crime rates and a steady depopulation. However, the community has shown a tenacity that is unrivaled in many of its neighboring communities. This is what drew Southern to Blytheville in 2009 through its purchase of First National Bank.
Underscoring our belief that rural communities are capable of positive economic growth and financial return, Southern has tripled capital investment levels in Blytheville from what they were pre-acquisition, proving that an efficient, values-based approach can have a positive impact on the community.
Situated just fifty miles from Blytheville, the small community of Trumann has remained relatively unscathed by many of the troubles its larger neighbor to the north has experienced. With population, unemployment, and crime rates that mirror national averages, Trumann could be called a shining beacon of economic prosperity were it not for a distinct lack of small business growth—the long term lifeblood of any community.
Southern’s acquisition of the Bank of Trumann in 2009 was a call to not only maintain the bank’s history of financial strength, but improve upon it with increased capital investment to support small business growth. After a slight drop in net loans upon acquisition, Southern not only returned the bank to a positive rate of net loan disbursement, but brought it to a level that outpaced pre-acquisition levels.
El Dorado, Arkansas
Situated in South Arkansas, Timberland Bank of El Dorado was another prime target for Southern’s unique brand of community banking. Similar to Blytheville, the El Dorado community has a rich industrial connection, in this case with the oil industry, which has helped keep its unemployment rate steady. However, a high percentage of individuals living below the poverty line, particularly those under 18, shows that challenges remain and that there is progress to be made.
Timberland Bank had experienced its own challenges in lending, placing it in a position in which selling to another institution was the best choice for shareholders and stakeholders alike. And while this starting position for Southern was itself a challenge, the new El Dorado branches of Southern were back to positive levels within a year of acquisition.
Growth in 2015
In 2014, Southern continued its growth into rural communities through acquisitions in Eudora, Arkansas and Mound Bayou, Mississippi—each with high poverty rates and few other banking options. Southern is committed to seeing the same, if not greater, level of success in these new communities as experienced elsewhere. Our optimism is underscored by our proven ability to create economic opportunity.