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State Bank & Trust grows with old-fashioned banking ideas

Greenwood — State Bank & Trust Company is a modern bank that’s growing by utilizing some old-fashioned ideas. That philosophy isn’t likely to change, according to Stewart Brumfield, chairman of the bank’s holding company, State Capital Corporation of Mississippi.

“It’s people, people, people — not bricks and mortar. That’s the secret,” the lively 69-year-old said. “You have to be friendly and interested in people and it makes no difference their walk of life. We’re still a God-fearing state in Mississippi and people pay their bills.”

In the banking business for 47 years, Brumfield says it’s best to run a bank like a family. When a new bank is acquired, he doesn’t believe in slash and burn but wants to retain the people who have built that bank. He also believes in hiring older bankers who were turned out by banks trying to save money.

“It’s just common sense. They know everyone in town. They go to all the meetings and funerals. Bankers are pallbearers, don’t you know?” he says.

With no public deposits, State Bank & Trust is a privately-held company with 22 branches stretched from Senatobia to Baton Rouge, mainly along the Interstate-55 corridor. It is now the fifth-largest bank in Louisiana and sixth largest in Mississippi. A recent issue of SNL Financial magazine cited the bank as one to watch, noting that it has “grown at a blistering pace over the last five years, expanding from $252.4 million in total assets at the end of 1999 to $602.9 million at September 30, 2004.”

It grew some more in November 2004 by agreeing to buy First Bancshares of Baton Rouge with $97.7 million in assets. That merger is subject to approval, but Brumfield says he knows of no reason for it not to be approved. Sherwood Briggs, managing director of New Orleans-based deal adviser Chaffe & Associates sees smaller deals of this kind dominating in the South — particularly Louisiana, Mississippi and Alabama, with midsize companies buying up community banks and thrifts.

Brumfield sees the acquisition as the most logical growth for State Bank & Trust. He identifies areas of population growth in Mississippi and Louisiana as red areas. Those include DeSoto County and the Jackson-Madison metropolitan area in Mississippi and St. Tammany and the East and West Feliciana parishes and the North Shore area of Louisiana. As a native of McComb, near Louisiana, he’s familiar with many of these places.

“We have a new bank under construction in New Roads, La., and I remember when it had a bait house, a hamburger stand and one other building,” he said. “I used to bream fish down there.”

State Bank & Trust Company is heavy in the residential construction mortgage business and follows the astronomical growth of these booming red areas. Brumfield says the bank primarily caters to blue collar workers, professionals and small businesses.

“That’s where most of our deposit base comes from and even though Mississippi is one of the most under capitalized states, there’s still a lot of money and it remains with you,” he said. “We’ve been the poor folks bank, but things have changed in Mississippi. A large segment of the population is employed and there’s far more disposal income now.”

The Gulf Coast is one area of growth in Mississippi where Brumfield says he chooses not to go. “The Coast is very blessed with two fine institutions — Hancock Bank and The Peoples Bank — with fine bankers Leo Seal, George Schloegel and Chevis Swetman, and I don’t want any part of ‘em,” the genial banker said.

State Bank & Trust has maintained the banking regulatory agency’s highest rating for the past eight years and Brumfield says it’s strong on one-on-one banking. That’s why they hire local people who know all the other local people. The company now has 275 employees and that number will jump to 350 when the most recent merger takes place.

Out of 22 branch banks, only three were acquired. All the others were started from ground zero without any deposits. He doesn’t rule out more acquisitions in North Mississippi and some ground zero banks in Louisiana.

“Everyone said I couldn’t get in Louisiana, but I did it in 32 days,” he said. “I know everybody in that area and there are lots of Brumfields.”

This Brumfield, who headed the Southwest District Planning and Development Commission before becoming a banker, says he’s just doing strategic planning for the bank now. “I like what I’m doing. I get a kick out of it and enjoy seeing people come in and make the bank grow,” he said. “I’ve got some fine young men coming along and I’ve turned the offices over to them.”

One of those young men is his son, Michael Brumfield, who is a regional executive in Covington, La. The company now maintains corporate offices in Ridgeland and Greenwood to better position itself for growth. Brumfield says he is pleased with recent positive publicity but prefers to keep a low profile and make money for the company’s stockholders. He will continue to do so, unfettered by the Wall Street Journal’s prediction that small banks will become dinosaurs. He even wrote that hallowed business publication to put them on guard that he might be a dinosaur — a Tyrannosaurus Rex.

“The Lord takes care of fools and bankers, and I know I’m one of those things,” he said.

Contact MBJ contributing Lynn Lofton at mbj@msbusiness.com.

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