Heritage Banking acquisition unites family, old friends

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Published: April 23,2007

There is a feel-good story behind a recent bank acquisition in Carthage that goes like this: A group of investors, looking to start a new bank catering especially to under-served Mississippians, is approached about buying an unnamed, well-established bank instead. When the name of the bank is finally disclosed, the group is thrilled as several of its members, including its leader, already had a close personal and professional relationship with the bank and its senior management. With finalization of the transaction, the investors had their bank, the bank had an infusion of capital to fuel future growth and everybody, all family, friends and associates, is smiling.

This is the fairy tale-like story behind the acquisition of the Heritage Banking Group by the investors, known as First Heritage Corporation. The deal was finalized in March of this year, and the enthusiasm of First Heritage’s leader, Dr. S.L. Sethi, president and CEO of Jackie’s International, is matched only by Frank Rhea’s, president and CEO of Heritage Banking.

“I’m very, very excited,” Sethi said. “Frank has a great team. He is the coach. He has his quarterbacks and star players. I just want to be the cheerleader, stand on the sidelines and yell, ‘Go, team, go!’”

Ray said, “I guess you can tell by the sound of my voice how excited I am. I’m just thrilled for what this means for us.”

Overcoming challenges

In the early 1970s when Sethi began searching for capital to launch his own business, he was fortunate. A native of India, he faced cultural and language barriers, yet, found a banker willing to take a chance on him. Sethi has since parlayed that seed money into Jackie’s International, a successful Bumpers Drive-In franchisee.

But, Sethi saw others with the same challenges who were not as fortunate. It left a lasting impression on him, leaving him determined to do something to help. Thus, approximately a year-and-a-half ago, he brought together a group of would-be investors to start a bank designed to make capital available to prospective home and business owners of all colors and backgrounds.

In the meantime, Heritage, which had also overcome obstacles, had its own aspirations. Founded in July 1920, the bank, originally known as The Carthage Bank, was established with $50,000 in capital and surplus to address the needs of Carthage and the surrounding area. As with almost all Mississippi banks, the Great Depression forced its closing. But, it reopened in 1934 under the leadership of the Sasser family.

The bank never looked back. Over time, the bank grew its presence outside of the immediate community, including the opening of two offices in the metro Jackson area in 2005, prompting a name change to Heritage. As 2006 dawned, the bank had four locations in Carthage, one in Edinburg and one each in Flowood and Madison.

By this time, the bank’s leader, James Sasser Jr., was in his 80s, and the family felt it was time to divest itself of its control of the bank. However, the Sassers wanted to sell only if the new controlling shareholders would value the bank’s history and its people, especially Ray, who got his first job at the bank when he was a 19-year-old college student and has never worked anywhere else.

The bank wouldn’t have to look far. Sethi and his family had been longtime customers of Heritage. As fate would have it, Heritage and Jackie’s International were represented by the same law firm, Jackson-based Watkins Ludlam Winter & Stennis. The two groups were paired, and the story came full circle.

Ray Harrigill, a member of the investor group and Sethi’s son-in-law, pointed out that the deal, as with all bank acquisitions or start-ups, was not that easy. Beyond negotiating, the transaction required sifting through copious amounts of paperwork and the acceptance of personal responsibility by each investor. When the group first met to form a de novo bank, it counted approximately 20 members. But the process pared that number down to seven.

“I understand and appreciate why you have to jump through all those hoops,” said Harrigill, who heads up The SunRay Companies, LLC. “Customers should have trust in their bank, and investors need to have a clear understanding of exactly what they’re getting in to and what is expected of them.”

But, the two groups’ familiarity with each other and the investor group’s already completed leg work in attempting to establish a new bank made the transaction easier. The group and the bank started working toward the acquisition in October of last year, and it was finalized at the end of March.

The members of First Heritage Corporation are: Sethi; Ray Harrigill, Sethi’s daughter and Ray Harrigill’s wife, Monica Harrigill; Earle Jones; Jones’ wife, Irene Jones; William Price; Dr. Vikas Majitha; and, David Thind. All are family or friends, and between them they own 49.83% of Heritage’s stock.

Looking ahead

Today, Heritage employs 24 workers and offers checking/savings, commercial/mortgage/consumer loans, in-house insurance products through The Heritage Agency and a number of investment products and services.

With its new investors, Frank Rhea and his team are expecting even bigger things in the future. Heritage is looking to further grow its presence in the metro Jackson area, and also has plans for offices both north and south of the Capital City. Neither the bank nor the investor group could comment on details at press time since plans are still being formulated.

However, Sethi gave insight to just how big these plans are. He said his goal is for Heritage to be a $1-billion financial institution in 10 years, which would represent more than five-fold growth.

Sethi was quick to add that Heritage would not cater to only minorities or the under-served. People of all backgrounds would be welcome. But, he has not given up on his commitment to helping those who sometimes find banks an insurmountable obstacle to access of capital.

“I want to help the little guy,” Sethi said. “We’ve been fortunate. My family has money. We didn’t get in this to make money. Honestly, I can make 10 times more money doing what I’m doing now. We got in this to put a little something back into the community.”

Contact MBJ staff writer Wally Northway at northway@msbusiness.com.

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