Monday, June 17, 2024

Bank presidents discuss financial health of local area

by BIZ Magazine

Local bank presidents say that from their perspective, the health of Shreveport-Bossier’s finance sector, and the region’s economy, is still recovering from the past 18 months of turmoil.

Jason Smith, president and CEO of Citizens National Bank, said that although community banks from other parts of Louisiana have recognized the benefits of being in the area, he thinks it is too early to tell the impact of the COVID-19 pandemic on his industry.

“I worry there may be a ‘long COVID’ impact to not only our area but the national economy as well,” he said. “The pandemic revealed an accelerated trend to more digital based delivery channels, and it won’t be reversed. Citizens National Bank has realized we can provide a great experience for our clients and employees even in less than ideal circumstances.”

President and CEO of Home Federal Bank Jim Barlow said lessons learned during the pandemic will help community banking for years to come. “Learning to adapt and transform operations over the last 19 months has set us up to power forward in the years ahead,” Barlow said. “Two new branches will open this year as part of HFB’s aggressive expansion plan that began in 2009. This speaks volumes about the dedication of our staff and customer loyalty.” 

Tom Martin, president and CEO of Gibsland Bank and Trust, noted that the local financial sector has been somewhat shielded from national issues.  

“Our local economic activity is fairly basic as activity is centered around goods and services, with less speculative investment of resources than on the national stage,” he explained.

He noted the government’s reaction to the pandemic dramatically increased the money supply through various stimulus programs while demand for money decreased as business slowed.

“These factors combined to drive down the price, or interest rates, of money,” Martin added.

Martin noted that as more dollars exist, each dollar is worth less and thus it takes more dollars to buy goods and services.  

“Not only our industry, but our economy as a whole has been negatively impacted by easy money and by supply chain interruptions,” he said. “Inflation could drive interest rates higher, there will be fewer dollars in the market, and we will likely see an overcorrection.”

As inflation lingers, Smith is optimistic that we are not entering a rapidly rising rate environment, explaining that as supply chains catch back up and inventories are replaced, there could be a slowdown in inflation. 

“Rising rates are generally good for banks, so a little increase would be welcomed,” Smith said.

Martin added that competition is now focused on loans, with borrowers benefitting from excess liquidity. 

Smith said that although loan demand has been down throughout the pandemic, he is seeing a little more volume lately and competition for good loans is still strong.

Martin pointed out that home construction and purchases are active, primarily due to the current low-rate environment.

Smith added that CNB is still financing a good number of residential construction projects.  

“On the development side, we have been involved in a more than usual number of subdivision projects. There are several parts of our area with stronger than usual demand for houses and lots,” he said.

Barlow noted the local economy is in recovery. “The local business community navigated the pandemic quite well,” he said.

“Through the government programs, liquidity in the banking system is at an all time high.  This means that customers – both retail and commercial – have money in their accounts to ride out this pandemic until things retail to somewhat normal.  The main issue is finding and retaining qualified employees that wish to return to the workforce.”

Using his unique view to diagnose the health of the local business climate, Martin expects equilibrium in inflation while interest rate and worker productivity will normalize economic activity.  

“This will come about in spite of governmental interference, for some period of time. Equilibrium will benefit everyone, as production and consumption increase,” he said. “We can only hope for sooner than later.”

Looking at the immediate economic health of the area, Smith says credit quality is holding up nicely and increased property values and a large number of willing buyers have protected our area’s borrowers. 

Long term? He’s a little more hesitant to wager a guess.

“There are political, social, medical and economic headwinds,” Smith said, looking ahead to 2022. “Until the issues surrounding these get resolved, we are going to keep doing what we have done for the last 36 years — support our clients, employees and communities and work as hard as we can to make all of them the best they can be.”

— BIZ. Magazine

Editor’s Note: The following are the Q&A with the three bank presidents we interviewed for this article. Note, no edits have been made to their responses.

Jim Barlow: Home Federal Bank

 A year removed from the COVID pandemic, how was your industry bank impacted? Do you think it has recovered or are there still issues affecting you/your industry?

During the unprecedented times of the past year, the digital platforms that helped us navigate through the onset of the COVID-19 crisis remain an imperative asset for HFB to meet customer expectations. Our mortgage digital point of sale platform and ProSign Online continue to provide a digital platform for customers that are unable to visit a physical location. As we look to the future, our key initiatives are focusing on our de novo branch strategy and other growth opportunities.  In June 2021, we announced plans for a new banking center located in West Shreveport’s Huntington community.  Additionally, in September 2021, we announced plans to enter the Minden, LA market to establish a loan production office which will be quickly converted to a full-service HFB banking center.  Because of competitive disruptions in both of these markets, we feel that these are timely decisions that will enhance organic growth opportunities.

When the Coronavirus threat emerged, our Senior Management Team made a commitment to ensure the safety and well-being of our employees.  To us, this meant that every employee would keep his or her job, salary and benefits. When we began to see a resurgence in the number of local Coronavirus cases, we made plans to create a bonus package for our non-exempt employees, who may be affected by the virus in some way.  Our employees consistently go the extra mile for our customers.  We want our employees to know how much we appreciate their hard work and dedication, and we want our customers to see how important our employees are to us. The Board of Director’s decision to recognize our employees is reflective of our commitment to the future growth and success of HFB. 

Did the pandemic reveal anything about your business sector that you didn’t already know? Did it show you anything about your bank/credit union?

Learning to adapt and transform operations over the last 19 months has set us up to power forward in the years ahead. Two new branches will open this year as part of HFB’s aggressive expansion plan that began in 2009. This speaks volumes about the dedication of our staff and customer loyalty. As large national and regional banks decide to leave this community underserved, HFB wants to invest in and bring local banking to our entire community of Northwest Louisiana. 

How has the current economic situation and perception affected your lending, either to businesses and/or private sector?

In 2020 HFB worked diligently to help support its customers through the SBA Paycheck Protection Program (“SBA PPP”), loan modifications and loan deferrals. Our lenders and operational support staff have accomplished what seemed to be an insurmountable task in providing a lifeline to our small community businesses. As of February, 2021, Home Federal Bank funded $65 million in SBA PPP loans for existing customers and key prospects located primarily in our trade area of NW Louisiana.  


From what you’ve seen in your institution, how is the health of the local business climate (deposits and loans increasing or decreasing, foreclosures on business loans, etc.)?
The local business community navigated the pandemic quite well.  Through the government programs, liquidity in the banking system is at an all time high.  This means that customers – both retail and commercial – have money in their accounts to ride out this pandemic until things retail to somewhat normal.  The main issue is finding and retaining qualified employees that wish to return to the workforce.  

As for HFB, our company reported strong financial results in fiscal 2021. Net income for the year was $5.4 million, resulting in diluted earnings per share of $1.66. The Company reported total assets of $565.7 million. Total deposits grew 10% to $506.6 million at June 30, 2021 compared to $460.8 million at June 30, 2020. 


What about rooftops – are you seeing growth in home loans and/or construction? What do you think that tells us about the financial health of area residents?

“Home sales and new construction are booming and that would indicate the financial health of our residents is strong.” – David Barber, Senior Vice President Mortgage HFB.  Additionally, with the reduction in interest rates, many home owners have been able to refinance their mortgages making their monthly payments much easier to maintain.  Some have even completed or begun remodeling projects to enhance the value or enjoyment of their homes. 

Looking ahead a little, what trends do you see for the start of 2022 and how might that affect your bank/credit union?

While we cannot predict what the next year holds, we remain committed to providing value to our customers, shareholders, and employees. As we look to the future, our key initiatives are focusing on our de novo branch strategy and other growth opportunities.  

Tom Martin: Gibsland Bank & Trust

From what you’ve seen, how would you describe the overall health of the local finance sector?

Much like  in 2008, our local financial  sector has been somewhat shielded from national issues.  Our local economic activity is fairly basic- activity is centered around goods and services, with less speculative investment of resources than on the national stage.

A year removed from the COVID pandemic, how was your industry impacted? Do you think it has recovered or are there still issues affecting you/your industry?

Banking theory is somewhat basic, we buy and sell money.  The price of money is subject to the same supply and demand curves as other goods.  Governmental reaction to COVID dramatically increased the money supply through various stimulus programs.  At the same time, demand for money decreased as business slowed and the government rewarded people for not being productive.  These factors combined to drive down the price (interest rates) of money.

Did the pandemic reveal anything about your business sector that you didn’t already know? Did it show you anything about your bank/credit union?

Nothing surprising in our business sector- competition is now focused on loans, with borrowers benefitting from excess liquidity.  Depositors remain quite disappointed in near non-existent returns on money.

As inflation lingers and could rise, do you see that having a negative impact on your industry? Why or why not?

Inflation is the result of the aforementioned supply and demand movements.  More dollars exist, making each dollar worth less- that means it takes more dollars to buy goods and services.  Not only our industry, but our economy as a whole has been negatively impacted by easy money and by supply chain interruptions (both a result of governmental intervention in an otherwise efficient free market).  Inflation could drive interest rates higher, there will be fewer dollars in the market, and we will likely see an overcorrection.

How has the current economic situation and perception affected your lending, either to businesses and/or private sector?

As always, we stand ready to support economic activity by enabling small businesses to employ workers and to provide goods and services to consumers as demand increases.

From what you’ve seen in your institution, how is the health of the local business climate (deposits and loans increasing or decreasing, foreclosures on business loans, etc.)?

Deposits have increased with money supply growth from governmental stimulus.  Loan demand has decreased due to lower production of goods and services.

What about rooftops – are you seeing growth in home loans and/or construction? What do you think that tells us about the financial health of area residents?

Home construction and purchases are active, primarily due to the current low-rate environment.

Looking ahead a little, what trends do you see for the start of 2022 and how might that affect your bank/credit union?

Equilibrium in inflation, interest rates, and worker productivity will normalize economic activity.  This will come about in spite of governmental interference, for some period of time.  Equilibrium will benefit everyone, as production and consumption increase.  We can only hope for sooner than later.

Jason Smith: Citizens National Bank

From what you’ve seen, how would you describe the overall health of the local finance sector?

We have a number of great banks in the Shreveport/Bossier community.  Even though some of the larger national companies have reallocated their resources to other markets; new community banks from other parts of the state have recognized the benefits of being in our area. 

A year removed from the COVID pandemic, how was your industry impacted? Do you think it has recovered or are there still issues affecting you/your industry?  

I still believe it is too early to tell.  I worry there may be a “Long COVID” impact to not only our area but the national economy as well.  

Did the pandemic reveal anything about your business sector that you didn’t already know? Did it show you anything about your bank?

As far as the industry goes, the transition to more digital based delivery channels has certainly been accelerated.  I doubt that trend will be reversed.  Regarding Citizens National Bank we have realized we can provide a great experience for our clients and employees even in less than ideal circumstances.  It also strengthened our employee culture.  Our branches, departments and divisions learned to work with each other and developed a deeper respect for each other.  

As inflation lingers and could rise, do you see that having a negative impact on your industry? Why or why not?  

I am not convinced we are entering a rapidly rising rate environment.  As supply chains catch back up and inventories are replaced, we could very easily see a slow down in inflation.  Rising rates are generally good for banks, so a little increase would be welcomed.

How has the current economic situation and perception affected your lending, either to businesses and/or private sector?  

Loan demand has been down throughout the pandemic.  We are seeing a little more volume lately, but competition for good loans is still strong.  We continue to be committed to meeting the credit needs of the Shreveport/Bossier area.

From what you’ve seen in your institution, how is the health of the local business climate (deposits and loans increasing or decreasing, foreclosures on business loans, etc.)?  In the near term credit quality is holding up nicely.  Increased property values and a large number of willing buyers have protected our areas borrowers.

What about rooftops – are you seeing growth in home loans and/or construction? What do you think that tells us about the financial health of area residents?  We are still financing a good number of residential construction projects.  On the development side we have been involved in a more than usual number of subdivision projects.  There are several parts of our area with stronger than usual demand for houses and lots.   

Looking ahead a little, what trends do you see for the start of 2022 and how might that affect your bank?  I am scared to guess how 2022 will develop.  There are political, social, medical and economic head winds for sure.  As the issues surrounding these head winds get resolved it will be easier to forecast where we will be this time next year.  Until then we are going to keep doing what we have done for the last 36 years.  Support our clients, employees and communities and work as hard as we can to make all them the best they can be. 

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