From many bank stock analysts’ viewpoints, one of the state’s most lucrative economic pockets is the Mississippi Gulf Coast. A dominant force in that market is the $2.7 billion-asset, Gulfport-based Hancock Holding Company, which has also expanded its geographic presence along the I-10 corridor to Baton Rouge, La.
While more than a few large-bank CEOs have drooled over Hancock’s enviable Gulf Coast market share, the company has remained independent, making investments in technology, distribution capabilities and product line to enhance customer relationships. A key figure in Hancock’s story — along with CEO Leo W. Seal Jr. — is George A. Schloegel, the long-time president of the bank and vice chairman of the holding company. A graduate of the University of New Orleans, Schloegel joined the bank in 1956, and has served the bank, the industry and the community in a variety of leadership capacities. Importantly, he has served this year as president of the Mississippi Bankers Association. As his term approaches completion later this spring, Schloegel shares some of his views on a changing financial environment and its impact on banks such as Hancock.
Mississippi Business Journal: Mergers are a fact of life in banking today and within the past year, two large homegrown banks in your region — Deposit Guaranty in Mississippi and First Commerce in Louisiana — have chosen this route. What will be the competitive impact in the markets Hancock serves?
George Schloegel: Thus far, the mergers in our market area have had no negative impact on our customer base. The national trend on such mergers has been favorable to the remaining community banks and we expect the same in our markets.
MBJ: You have frequently mentioned Hancock’s “Interstate 10” acquisition strategy. Are you still committed to this strategy going forward? What market synergies exist between these areas and Hancock’s home base?
GS: The east-west interstate acquisition strategy remains in place for Hancock Holding Company. The markets along interstates 10 and 12 have remarkable similarities and, of course, the communications and daily travel in these zones helps perpetuate those similarities.
MBJ: Escalating technology-related costs and the “revenue wall” have driven more than a few acquisitions in recent times, particularly among banks in the $1 billion to $10 billion range. How is Hancock looking at these challenges?
GS: Hancock Bank is currently in the middle of a project called Mission Centennial which involves a $13 million investment over the next 18 months in enhanced technology (platform automation, etc.) that will match our delivery system against that of banks several times our size.
MBJ: Several analysts and competitor bankers are impressed with Hancock’s enviable market dominance of the Gulf Coast. How has your company been able to retain this strength in light of extremely competitive market conditions?
GS: Hancock Bank has a 99 year history of strong commitment to the economic growth of the communities we serve. That commitment has kept us involved in all aspects of community life that translates into a respectable market share.
MBJ: What do you see as your franchise’s greatest competitive strengths — people, products, service, accessibility? How will you continue to leverage these strengths in the future?
GS: In the markets Hancock Bank serves, we employ a wide branch bank delivery strategy — to locate near our customers. Our 81 locations in four Coastal counties and five Louisiana parishes attest to that strategy.
Having competent bankers in Hancock’s 81 branch locations and giving those bankers the training and the technological tools to deliver quality service has been the strength of our franchise. In the future, we plan to continue the same philosophy and techniques that have served us so well in the past.
MBJ: As president of the Mississippi Bankers Association (MBA) this past year, what have you seen as the organization’s greatest challenges?
GS: The Mississippi Bankers Association has three primary missions:
All three present challenges but the most noteworthy challenge is the barrage of unfavorable publicity on the national level about banks in general. Hardly a day goes by without some negative comment about “big banks.” The articles are referring to the huge money center institutions but the way the articles are presented paint a negative picture of the community banks in our state. Mississippi banks are responsive to their hometown Mississippi customers with low fees and quality service — but I have never seen any reporting about those low fees or quality service.
MBJ: What have been some of the greatest accomplishments of the MBA this year?
GS: The MBA has conducted nine regional meetings attended by bank officers and directors to better communicate the current issues before our industry. We also hosted nine regional dinners with the members of the Legislature and one statewide dinner to present the current state of affairs of Mississippi’s economic issues.
• The Mississippi Bankers Association officers and staff have completed personal visits to a majority of the banks in the state to open a deeper line of two-way communication. The Mississippi Bankers Association has introduced a multi-year Communications Council made up of a cross-section of seasoned Mississippi bankers who are addressing the long-range issues facing our industry. A full-time communications director joined the association in 1997.
• The annual convention will be held in Biloxi in May.
• The MBA School of Banking at the University of Mississippi enjoyed a record attendance in 1998.
• The MBA is in the process of incorporating a statewide chapter of the banking industry’s education arm — the American Institute of Banking (AIB). The statewide AIB program will offer, provide, teach and administer a broad range of formal adult educational courses for bankers on a variety of business subjects. The courses will be offered within a close geographical quadrant of the hometown banks’ students.
MBJ: There have been some regulatory grumblings nationally about the prospect of deteriorating underwriting standards — a credit complacency given the nation’s economic prosperity. Do you agree, and if so, what specific areas do you think bankers should be focusing on to circumvent any problems?
GS: The nation is enjoying one of its longest periods of economic prosperity in history. However, we are experiencing more credit card debt and few people seem concerned. Personal bankruptcy is at obscene levels.
The banking industry should be concerned that one day the economy will turn. What will be the consequences of over-extension of credit? The time to make adjustments is before those adjustments are necessary. Many Mississippi bankers share this concern.
MBJ: Any closing remarks about Hancock’s or the MBA’s priorities moving forward:
GS: To paraphrase a wiser man than me — those of us who fail to learn from the mistakes of history are doomed to repeat those mistakes.
Twenty years ago, the savings and loan and thrift industry conducted a massive grass-roots lobbying effort to have Congress expand S&L powers from residential home lending to full banking services. When the economy turned, most of the thrifts found that their reserves would not cover the speculative lending reflected on their balance sheets. As a result, billions of dollars of tax money was spend to bail out the failed thrifts and billions of dollars were assessed against commercial banks to combine our FDIC reserves with the faile
d FSLIC. The expansion of S&L powers was a serious mistake.
Today, the large c
redit unions are asking Congress to expand credit union powers and to