This year, we ranked about 70 banks by an index formula that sought to identify and quantify the quality of a bank's service to the community. We graded the institutions on their ability to provide capital to low-income populations and to small business borrowers.
Bancorp South (BXS) did well on both scores. They scored particularly well on business banking, but they were still able to demonstrate a fairly high level of mortgage lending for low-income borrowers and low-income neighborhoods.
Today, I'm going over their annual report. True, the picture on the front is a bit over the top. But, I like to see that they've actually had a fairly good year. Shareholder equity increased by 3.6 percent. Book value went up 2.6 percent. They even managed to increase their dividend! They extended their stock repurchase program.
The picture is not all rosy. Like almost all banks, they saw a drop in their net income and in their share prices.
One statistic stands out, though. They indicate that 41 percent of their mortgage customers make their monthly payment in person, at a teller window. That is just the kind of personal service that most banks have eliminated. It's too expensive, the reasoning goes, to provide face-to-face attention to customers. Better to sell the loan and have a servicer take care of the payments. Argghh.
Yet it makes so much sense. What kind of accountability does it generate to have a teller see the same person, once a month, coming in to pay their mortgage? I bet the answer is that it makes a big difference. Customers know that if they don't make a payment, that a real person will notice. Moreover, as they do make payments, it solidifies an identity grounded within the context of a personal relationship. That has got to be something that reinforces responsible borrowing.
The confirmation of that vision is found in their rate of loan charge-offs. In 2008, a bad year for most banks, BXS has a charge-off rate of just 0.4 percent. Oh, and that was an increase from 0.14 percent in 2007 and 0.15 percent in 2006. Most banks would dream of those kinds of numbers.