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Deposits up at Coast banks as cash flows into the region

Mississippi Gulf Coast — There’s been a flurry of banking activity here in the months following Hurricane Katrina.

Deposits are up with the infusion of money from insurance settlements and checks from nonprofit organizations and governmental agencies. Coast bankers are adjusting their business methods to meet the needs of customers.

This sort of activity is expected after a storm, says Hancock Bank chief financial officer Carl Cheney. “We’ve seen enormous growth to $1.5 billion in deposits since Katrina,” he said. “It’s pretty phenomenal and is everything ranging from FEMA assistance to insurance payments to Red Cross checks.”

He says the level of activity has picked up but it’s not unique to banking. A look at history reveals that it’s typical for the economy to take off following a disaster and dollars turn over many times. That’s a big boost to the economy when the multipliers are taken into account.

Chevis Swetman, president of The Peoples Bank, says deposits are up about 50% at the Biloxi-based bank with the various payments to individuals and relief funds to municipalities. Banks are now getting ready for the next wave of cash infusion as Community Development Block Grant payments are made to homeowners in the coastal counties.

“We’re seeing people have a lot of cash on hand and they haven’t deployed it yet,” he said. “They may be waiting for cities and counties to be more definitive with flood maps and that creates fear and doubt. Or they may just be waiting for structural engineers or contractors.”

That extra cash circulating has helped the Merchants & Marine Bank (M&M) in Jackson County be able to make more loans and investments, says president Royce Cumbest. Deposits at the Pascagoula headquartered bank are up about 40% since the storm.

“The general impression I have is that most people have not yet used a large amount of the money they received because there’s so much confusion over elevation and other issues. Some people haven’t even settled insurance issues,” he said. “People thought the rebuilding would be much quicker. As time goes on, we’re seeing some of the money shifted to interest-bearing accounts.”

Cash is still king as it was immediately following the storm, Cheney points out. “People have more cash, and it’s especially used with some of the immigrant workforce. That’s typical, too, after disasters,” he said. “There was no electricity for 11 days and no way to use cash machines. We had to make cash available to our customers and opened up the next morning after Katrina in key markets even though we used folding tables and flashlights.”

Cumbest says the economy in Jackson County is surging back strong even though there’s still a lot of rebuilding to be done. “Business is exceptionally good. I hate to say that. but the bank has had a good year,” he said. “The delinquency rate on loans is excellent; better than the year before the storm, and we’re seeing a lot of payoffs on auto loans. That’s because there’s more cash in the economy and fortunately, people here pay their bills.”

Swetman says he doesn’t see people using credit cards as much as he did immediately following the storm. He observes that customers are making loans and paying them off quickly.

Another change in the way customers are banking is the increase in electronic banking. “It’s because of logistics,” he said. “There’s no quick drive across the bridge anymore.”

The Peoples Bank is primarily a commercial financial institution, and Swetman sees small business activity starting to take off with an infusion of funds. “Banking has picked up and there’s a lot of energy in the area,” he said. “All my banks are back open with the exception of Bay St. Louis, and we expect it to be back in the original structure in three weeks.”

The Pass Christian branch is in a temporary facility while Swetman looks for property to build a permanent bank there. “We’ve had two banks in the old location blown away so we’re looking for a new location,” he added.

Cheney says Hancock Bank created new certificate of deposit products because customers have more cash and want to put it to work and earn interest. “There’s a lot of cash in the marketplace, and people aren’t sure when they will need their money,” he said. “We’re trying to be sensitive to their needs. If a contractor shows up, our customers better be ready with money. These CDs are set up for one-time withdrawals without penalties.”

The M&M Bank is trying to help customers apply for the homeowner loans available through the state. “We’re encouraging them to apply and providing information,” Cumbest said. “We’re assisting them with the application process, particularly those who do not have personal computers. I talked to one of our customers about it Sunday afternoon on the golf course.”

Although M&M Bank is still headquartered in temporary offices in a Pascagoula shopping center, all 11 branches are open and functioning. Construction continues on the new headquarters downtown with completion expected late this year.

“We’re still short handed in some areas,” Cumbest said. “We have to be flexible with our employees because many of them are dealing with a lot of personal issues. Our board has been good to allow us that flexibility.”

The Hancock banking system has all facilities up and running except in two locations. Some are in temporary modular facilities, and Cheney says all are well on the way to rebuilding.

The bank executive says he is proud of how Coast citizens have pulled together and tells the story in presentations to stock analysts all over the country. “I’m glad to tell the story of the resilient Gulf Coast residents,” he said. “It’s a heart-warming story, and people everywhere are wowed by it.”

Contact MBJ contributing Lynn Lofton at llofton656@aol.com.

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