TEXARKANA -- Local bankers see reason to be optimistic about the economy's sustainability, despite recent disruptions.
Between the COVID-19 pandemic and rising inflation, businesses, consumers and lenders have faced difficulties in the past few years. But the regional economy is especially resilient, and banks that serve local communities are well-positioned to continue providing valuable services, according to two Texarkana-based banking executives.
Dave White, chief lending officer for Farmers Bank and Trust, and Philip K. Mobley, CEO and chairman of Commercial National Bank, said they see near-term stability for the banking industry.
"The business people I've talked to, they're continuing to borrow money. They're continuing to expand. They're continuing to improve their businesses. We've seen a little bit of slowdown in our lending business, but the last two or three years are the best two or three years that I've had in probably 25," White said.
Mobley also gave a good report on the industry.
"Well-managed community banks have remained resilient while navigating COVID-related issues, subsequent rate swings and recent 'big bank' seizures," he said, adding that tighter regulations following the Great Recession of 2007 have helped.
"However, no amount of regulation is as effective as good, sound banking practices. I believe community banks have an inherent advantage over the largest national banks in this regard, because we have a better understanding of our customer base. Customers aren't just 'a number' to us. We develop long lasting relationships with our customers that go beyond just rates and terms," Mobley said.
White said the region has seen strong employment and rising wages that offset some of the cost of inflation, and it is somewhat insulated from the highs and lows of the market.
"Our housing market is not increasing 10% a year like Dallas, Austin or Houston. It's a slow, steady build.
"Our area has always really been resilient. We don't have huge swings up or down. The bigger the swing, the bigger the fall. We've just had a steady growth. Slow and steady wins the race," he said.
During the worst of the pandemic, Farmers made more than 1,100 Paycheck Protection Program loans totaling about $100 million. But the bank was not alone, White said.
"I think all the banks in our area do a great job of serving their communities, and all played a part in the pandemic. We weren't alone in making the PPP loans.
"There are a lot of good banks here, and we all work really hard to try to meet the credit needs of that community. And I think we do a really good job of that," he said.
Interest rate increases by the Federal Reserve Board have decreased how much many are able to borrow, as well as incentive to sell a home and take on a new mortgage, White said.
"I won't say it's harder (to lend), but our volume has slowed down. The higher interest rate hurts new couples or people entering the workforce or new homebuyers. It just cuts the amount of housing that they can purchase," he said.
Still, perceptions are skewed by recent very low rates.
"We've just conditioned a generation of people that anything above 4% is too high," White said. "A natural historical interest rate averages at probably 7%."
Conditions have defied any anxiety about a potential recession.
"Typically in a recession, you see unemployment rise and then wages start to fall. The workforce, unemployment and wage growth have defied the recession fears, and it might keep us out of full blown recession," White said.
Mobley struck a more cautious tone.
"However, if the Fed continues its rate increases, especially while insurance premiums and property taxes are on the rise, we could see more hardships for consumers and businesses. This will put even more emphasis on sound banking practices," he said.
Commercial National Bank was founded in 1964 and now has five branch locations in Texarkana and one in Fouke, Arkansas. (Photo courtesy CNB)