Brandon-based Community Bancshares continues to run far ahead of other Mississippi banks in the amount of money loaned to businesses through the Small Business Administration.
Community Bancshares, the $2.5 billion parent of four separately chartered Community Bank companies based in Biloxi, Ellisville, Brandon and Amory, made slightly more than $47 million in SBA loans from Oct. 1 through Aug. 31. The loans went to 80 businesses, according to the SBA Mississippi’s weekly “Show Me the Money” lender list.
Community Bancshares has led the pack since 2010, according to COO David Hughes. “We felt that the SBA was a real viable option for our customers and reduced the risk for the bank” with its backing of 70 percent to 75 percent of the loan.
First Financial Bank, an El Dorado, Arkansas, banking company with branches in Carthage and Senatobia and a loan office in Magee, is the closest in dollar lending to Community Bank at $9.6 million. A loan to Philadelphia poultry company H&P Investments accounted for $1.9 million of the total, according to SBA reports.
BancorpSouth, a Tupelo regional bank, followed closely in dollar lending with nearly $7.7 million in SBA-supported loans to 25 businesses.
Community Bank is one of only a handful of Mississippi banks the SBA designates as “Preferred Lending Partners,” a classification that authorizes the banks to approve SBA loans without the lengthy reviews required in sending the loans through SBA channels for approval.
“You know they know this stuff very well and can go ahead and approve them,” said Gary Reed, deputy director of SBA’s Mississippi District office in Jackson.
The Preferred Lending Partner status enables Community Bank to make SBA loans efficiently and timely, Hughes said. “They don’t have to be sent off to the SBA servicing center. It gives us a competitive advantage.”
The SBA audits its Preferred Lending Partners every two to three years for compliance with SBA underwriting rules and other regulations.
“It’s a specialized type of lending,” Hughes noted. “We’ve put an expert team together here at our Brandon headquarters.”
Former SBA loan officer Ralph Hall heads the bank’s SBA-related lending.
The SBA has stepped up efforts to support loans to Mississippi’s poultry farm operators. Community Bank followed by setting up its own poultry lending department. “We have poultry lending specialists wherever that is a predominant business,” Hughes said. “They know how to deal with the farmers and the processors.”
Hughes said the default rate on its SBA loans is low and no serious problems have arisen from them over the years, a circumstance he attributes to thorough vetting of the borrower and his capacity to meet loan terms. “They must still meet good lending criteria,” he added, but noted SBA involvement does provide some flexibility on underwriting loans for start-ups and small business expansions.
The SBA guarantee “helps you look at the loan a little differently,” he said.
SBA loans are but one element of the commercial lending Community Bancshares does through the Community Banks. “We have a very successful commercial lending” operation, Hughes said. It does a much larger volume of lending than the SBA division, he added.
Community Bancshares’ received about $54.6 million in low-cost capital in a 2010 U.S. Treasury Department allocation of Community Development Capital Initiative money. The Treasury money, lent to the bank at 2 percent with an 8-year payback, had to be targeted toward under-served areas of the state for residential and business lending.
“That gave us the additional capital to expand our lending when consumers and businesses needed loans,” Hughes said of the CDCI, an effort that was part of the Troubled Asset Relief Program, or TARP.
The bank has already lent out its $54.6 million allocation, according to Hughes. Mississippi banks received nearly $250 million of the $1 billion total the Treasury provided through the Community Development Capital Initiative.
Gluckstadt residents Jay and Andrea Criddle learned firsthand about the specialized nature of SBA loans when they sought a loan to start the Children’s Academy of Madison. They recently had their 5-year-old loan, now at $106,000, transferred to BankPlus.
The original bank took seven months to close the loan. “And to us that was unacceptable,” Andrea Criddle said. “We soon realized that it had nothing to do with the SBA but more to do with the bank that we used. They did not have an SBA specialist and had never closed an SBA loan before. So they were running blind when it came to our loan”
BankPlus has been “a totally different situation,” Criddle said. “The SBA specialist was very helpful and knowledgeable. She knew the ins and outs and we absolutely had an easy closing and transition to BankPlus.”