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Friars Point Bank Struggles to remain open

By: LARRY E. BINZ

Delta Southern Bank officials have told Friars Point residents more deposits and loans are needed to keep the local bank open, but they have yet to specify how much additional revenue would make it a profitable venture.
Farmer and agri-businessman Charlie Craig asked Delta Bank President George Purcel Thursday night, “How much will it take to make the bank profitable?”
“I can’t give you numbers,” Purcell said. “There are too many variables.”
Ed Peacock, the Coahoma County Chancery Clerk, who has family ties to the town and 22 years of banking experience, told Purcell, “I tend to disagree with you.”
Peacock said the Friars Point bank as he sees it has a relatively small amount of expenses.
“Salaries are not a big expense,” Peacock said.
Friars Point’s bank came under fire in late 2005, when Southern Development Bancorp, Delta Bank’s parent company, cited recurring annual net losses that officials said must be reversed to keep the bank open.
Purcell told Friars Point residents at a meeting at Delta Southern Bank in Clarksdale in January that Delta Southern is losing money at a rate of $20,000 or more a year.
Purcell said then he saw no viable reason to prevent the corporation from closing the Friars Point bank.
An outpouring of townspeople and the intervention of U.S. Rep. Bennie Thompson, D-Miss., at a later meeting in Friars Point called Delta Southern’s attention, brought an local outcry against the possible closure.
Purcell and Ralph Baldwin, the chief executive officer of Southern Development Bancorp at Arkadelphia, Ark., said at that meeting a minimum $6 million in deposits and $3 million in loans would be needed to keep the bank operational.
Figures presented at Thursday’s meeting in Friars Point Elementary showed about $500,000 in loans and more than $2 million in deposits. The loan base began at 0 in January.
Samantha West, a loan officer, has been coming to Friars Point from Clarksdale on Thursdays to handle loans and other financial needs.
Meanwhile, Delores Morganti, who has been a fixture in banking in her hometown of Friars Point for 56 years, was transferred to the Clarksdale bank recently.
A number of people raised questions about that reassignment, but Purcell and other officials said “that is a personnel matter and is not open to discussion.”
Peacock called the transfer of Morganti a backward move in terms of community relationship between the corporation and Friars Point.
At the outset of Thursday meeting, Purcell said Delta Southern wanted to “form a partnership” between the corporation and the community.
“We got each other’s attention and we have taken steps to meet some of those needs,” Purcell said.
Purcell said originally Delta Southern was looking at $8 million in deposits and $4 million in loans, but those figures have been scaled down given the economically depressed nature of Friars Point.
Craig said farm loans would be one means of boosting the loan portfolio since agriculture is the region’s prime economic force.
Purcell and Joe Black, Helena, Ark., one of the Southern Development Bancorp’s top executives, left open that possibility.
Flo Larson, who worked tirelessly from the onset to help save the bank, said her research showed Southern Development Bancorp’s mission is to work in economically depressed areas of the Arkansas and Mississippi deltas.
“You knew what you bought,” Larson said, regarding banks at Lula, Friars Point, Sledge and Lambert. “We were excited that you were going to help these communities.”
“We were bolstered by what we saw, but this is tougher here in Friars Point,” Black said.
Standing beside Larson, Purcell said records show the financial transactions including loans and deposits have gone down since Delta Southern acquired the Friars Point bank.
That brought a question from the compliance officer with the Federal Deposit Insurance Corporation’s regional office in Dallas.
“Have you looked at why the loans and deposits have gone down?” the FDIC official inquired.
Some townspeople murmured among themselves, “Sounds like a corporate management problem.”
Black said the basics of banking economics said the return on assets minimum to remain efficient is 1.50 ratio. The ROA in Friars Point is .52, he said.
Black said Delta Southern is “the only bank in Mississippi – in America – that would try to operate at .52.”
He said banks AmSouth, Regions, and Union Planters would not attempt to deal with rural communities.
“After six months we are still losing money,” Black said.
Drew is on par population-wise with Friars Point, while Ruleville is a hub of area and home to the corporation’s banks in Mississippi.
Delta Southern recently opened a new bank at Indianola.
Purcell said Southern Development Bancorp invested $280,000 to help “revitalize” downtown Drew.
Most of the revitalization appears to be street lighting and landscape, rather than structural improvements.
Drew’s commercial district spans one block with shops and a law office.
Barbara Morris, the town’s postmaster, told Purcell if Delta Southern does decide to close the bank, “You won’t be getting the accounts at another Delta Southern Bank.”
Clinton Vaughn, a community relations specialist with FDIC in Memphis, said the town and bank need to form a sound relationship to benefit both.
“If you’re going to keep the bank you need make ag loans,” Vaughn said.
Vaughn the citizens “You are very close to where you need to be.”
Black said Friars Point is considered a “Type III” bank market, because of its depressed economically.
He said the more fiscally stout banks in the corporation’s realm in Arkansas are classified as Type I banks.
“Maybe you should have stayed in Arkansas,” Larson commented.
Black said the corporation has learned tough lessons about working in economically depressed communities.
There were further time frames set for meetings between bank officials and the townspeople.
A citizen said the night was a poor choice to hold the meeting, because there are many residents who attend Missionary Baptist Churches, who are attending a week-long a conference at Chapel Hill Missionary Baptist Church in Clarksdale.
Several residents, including Barbara Morris, said the bank did send out media information in advance of the meeting.
“We sent flyers,” Black said.

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