Bank City USA

By Evan Sparks

Here’s a financial trivia question: What does Tupelo, Miss., have that some of America’s largest metro areas, including Atlanta, Phoenix and San Diego, don’t?

The answer: at least two midsize or larger banks headquartered there. Tupelo—a town located in the gently rolling hills halfway between Memphis, Tenn., and Birmingham, Ala., and with a population a little shy of 40,000—is the smallest U.S. city to have two banks with more than $10 billion in assets call it home.

The two banks headquartered there—BancorpSouth Bank and Renasant Bank—have long histories in the town. How has Tupelo benefited from having these particular institutions based locally? And more specifically, in an age of bank consolidation, what difference has it made that there are two major hometown banks headquartered in a town Tupelo’s size?

Downtown renewal

The first sign of the two bank headquarters’ effect is their immediate neighborhood: downtown Tupelo.

I grew up a couple hours up Route 78 near Memphis, and I’ve spent time in plenty of small towns across the mid-South region. In many, to describe the downtowns as dying would be putting it charitably. Most businesses had migrated to the edges of town, near highway bypasses and big box chain stores. The handful of businesses that remained would be of the more depressing variety—bail bondsmen who needed to be near the courthouse, for instance—and in many places, abandoned storefronts would outnumber occupied buildings.

Unlike most cities of its size, Tupelo’s downtown is doing quite well. Almost every storefront has an occupant, and it has a balanced mix of offices, restaurants, retail outlets and even residences. It even has Reed’s, an old-school local department store that takes up an entire city block. Across the street from Reed’s is Tupelo Hardware, where locals can pick up a hard-to-find screw and tourists can pick up the story of Elvis’ first guitar, purchased on the premises.

The headquarters for BancorpSouth, on the left, sits across Spring Street from Renasant Bank in downtown Tupelo.

“To have two large financial institutions that are based in downtown Tupelo makes an enormous difference,” says Mitch Waycaster, Renasant’s president and CEO. The two banks are anchors of downtown. Their headquarters are located directly across Spring Street from each other, one block south of Main Street in the center of Tupelo. BancorpSouth’s is a sleek, multistory, glass-sheathed building with angular features. Renasant occupies a solid brick structure dating to the 1980s that blends traditional and modern elements. Together, they employ nearly 1,400 people in the Tupelo area.

“We’ve got more people working downtown than we ever have,” says BancorpSouth Chairman and CEO Dan Rollins. These employees walk to lunch, make purchases and draw other businesses to locate nearby. “The employment numbers are a built in market for restaurants and retail in the area,” remarks Debbie Brangenberg, director of the Downtown Tupelo Main Street Association. “Both banks contribute to nonprofits and support our Downtown Tupelo Main Street program as sponsors for events, not only in cash contribution but with volunteers.”

And by being located in the city core instead of on the suburban fringe, both banks contribute to the city’s sales and property taxes, allowing for further public-sector reinvestment. “You’re very fortunate as a city to have those type of property owners in the city,” says Tupelo Mayor Jason Shelton. “It elevates the tax base for all of the citizens of Tupelo.”

Tupelo City Hall in the revitalized Fairpark neighborhood in downtown.

Just across the railroad tracks from the tidy downtown is a brand-new neighborhood called Fairpark. With broad streets and stately brick buildings, it looks brand-new but fits in nicely with its surroundings. But it didn’t always. For decades, it was a literal brownfield site: the livestock pens for the county fair. Across the street was an abandoned mall. The two sites lined the road leading into downtown from U.S. Route 45. “You can imagine how dark it was entering our downtown,” comments Shane Homan, SVP at the Community Development Foundation of Tupelo.

A public-private partnership kicked off a process of renewal fueled in large part by leadership at BancorpSouth and Renasant. The abandoned mall has been repurposed as the BancorpSouth Arena and a conference center plus hotel. Meanwhile, the fairgrounds are being transformed into a brand new office, retail, entertainment and residential neighborhood that includes the CDF’s Renasant Center for Ideas, a business incubator. “For downtown to be successful here or anywhere, you have to have people there,” says Shelton in his city hall office in Fairpark. “That facilitates the success of the area.”

The Tupelo spirit

The story of Tupelo’s strong present-day performance begins with the railroad in the late 19th century. During the peak of the railroad era, some communities resisted the arrival of the iron horse. One of Tupelo’s neighboring towns, at the time the first chartered town in Lee County, didn’t want the railroad line being built between Memphis and Birmingham, says Guy Mitchell, a Tupelo lawyer who serves on the board of BancorpSouth. But “the people in Tupelo said, ‘We would welcome the railroad,’” he reflects. “That spirit of local people taking risks was born way back then.” Not long after, Tupelo became a rail junction, where a line connecting Kansas City to Birmingham intersected with a route linking the Ohio River valley with the Gulf Coast. The railroad opened national markets to northeastern Mississippi’s agricultural sector and turned Tupelo into a regional hub.

In 1886, a small bank in Verona followed the railroad north and became the Bank of Tupelo. The bank financed the first large industrial concern in the city, a cotton mill that processed the product of the surrounding area. That bank—today the second-oldest still-operating bank in Mississippi—eventually became a statewide bank called Bank of Mississippi and then an interstate company known as BancorpSouth. Meanwhile, Renasant had its origins as the Peoples Bank and Trust Company.

Peoples Bank was organized in 1904 to capitalize on the railroad-driven growth coming to Tupelo, and (presaging Renasant’s acquisitive future) Peoples Bank acquired its first three banks between 1911 and 1919. (The Renasant brand came in 2005; Peoples was planning to acquire a bank in Alabama but would not be allowed to use that name there as another bank already used it, so Peoples adopted the brand of a small bank it had acquired in the Memphis area.)

The partnerships among the Tupelo banks started early. In 1916, a cotton crop failure made then-Peoples Bank president S.J. High concerned about the excessive reliance on cotton by Northeast Mississippi farmers. A cotton crash could bankrupt farmers—and take the bank down with them. He and other Tupelo bankers banded together and brought two train cars full of Jersey heifers to Lee County and distributed them to farmers to kickstart a dairy farm industry. A few years later, the city and county hired dairy agents to provide technical assistance to farmers and increase their dairy production—and Peoples Bank paid their salaries.

Growth as a regional hub helped Tupelo diversify into furniture manufacturing, and it remains today one of the largest furniture manufacturing hubs in the country, with a specialization in “motion furniture”—recliners, rolling office chairs and the like. “The labor climate here was highly favorable to economic development,” says Mickey Holliman, a retired furniture executive who also served on the BancorpSouth board. In 1970, he and a business partner founded their own motion furniture company, and BancorpSouth provided them with startup capital. “This bank took a risk with us,” he recalls. “The reward was [that]we built it into a $500 million company after 15 years.”

Strategic vision

The growth of manufacturing in Tupelo was no accident. It was spearheaded by the CDF, a nonprofit formed in 1948 by George McLean, the publisher of Tupelo’s daily newspaper. The CDF is a forum where Tupelo businesses “put aside self-interest,” says Mitch Waycaster. A key element of the Tupelo spirit lore, the CDF is a channel of foresight from Tupelo’s civic and business leaders that has fueled a great deal of the growth in every local industry.

Elvis Presley’s birthplace, now a popular museum.

One of the industries, in a manner of speaking, is Elvis Presley. “We had him for 13 years, and we’re trying to make the most of that,” smiles Mitchell. The more than 50,000 tourists who pass through Tupelo to see Elvis’ humble two-room birthplace, preserved along with his childhood Pentecostal church on a green hillside east of downtown, contribute greatly to the Tupelo economy and to outsiders’ awareness of the city.

Then there’s the award-winning North Mississippi Medical Center, the nation’s largest non-metropolitan hospital. “Our history as a health care system goes hand in hand with the development of the two banks,” says Shane Spees, health system president and CEO. He notes that longtime Renasant Chairman Robin McGraw is the hospital’s outgoing board chairman, succeeded by Dan Rollins as incoming chairman.

Tupelo also benefited from having one of the earliest integrated school districts in Mississippi. While the city was not free of racial strife, integration occurred more peacefully than in other Deep South towns. Jack Reed Jr., a former Tupelo mayor who runs Reed’s Department Store downtown, notes that Tupelo never had a “private academy,” a term for the segregated private schools that sprung up across the South as public schools integrated. Locals organized to keep white kids in the public schools, and the banks’ leaders pushed that as well, Reed says—which meant continued investment in the public schools. Today, the Tupelo Public School District ranks fourth out of 144 in Mississippi according to the website Niche, and that performance contributed to Tupelo’s employment-ready workforce.

With a growing manufacturing industry—and one that relies on mechanically skilled workers—Lee County and the CDF partnered with two neighboring counties to lure Toyota’s eighth U.S. assembly plant. “That was the first time in Mississippi history that three counties got together” to recruit a manufacturer, says Rollins. The plant, which opened in 2011, isn’t even located in Lee County—it’s in Blue Springs, about midway between three county seats and a 20-minute drive from downtown Tupelo. Both banks supported the recruitment effort; today, 1,500 Mississippians work there assembling Toyota Corollas. Setting aside competitive considerations among the three counties—that too is a manifestation of the Tupelo spirit.

Advanced manufacturing at Toyota continues to be a driver of more investment—in addition to making sophisticated furniture, Tupelo is home to advanced facilities producing lighting, plastics and even electronic launching systems for aircraft carriers. The banks are “our greatest ambassadors,” when it comes to recruiting new businesses, Homan says. “They’re typically the first corporate people that meet with employers considering locating here.”

Comparing Tupelo with Peer Cities

A bustling downtown may be a helpful proxy for a healthy city and economy, but it’s not the final word on a city or region’s economic well-being. In Lee County, where Tupelo is located, the average 2017 unemployment rate was 4.1 percent—lower than most other counties in Mississippi. In 2015—the most recent year for which county-level GDP data is available—the county’s gross domestic product grew by 6.2 percent, ranking sixth among Mississippi’s 82 counties.

For a side-by-side comparison of Tupelo’s economic performance among its peers, see the table. It compares Tupelo with nine other peer locales—small southern cities that share similar demographic profiles and population levels and that are not located in the economic orbit of a larger metro area. From 2012 to 2015, the Tupelo area economy grew by 5.1 percent—the fastest growth rate of all, and one of just three peer cities to see growth in that period. Its unemployment rate in 2015 was the lowest in its peer group. Last fall, Reader’s Digest named Tupelo one of its 15 “best places to move to in the U.S. (before they get too crowded).”

Moreover, Tupelo is missing key economic drivers that other peer cities enjoy. Unlike Florence, Ala., or Alexandria, La., it is not located on a navigable river. Unlike Hattiesburg, Miss., or Jackson, Tenn., Tupelo does not have a major university presence. What Tupelo does have—in fact, what I heard over and over during my visit—is the “Tupelo spirit.” And that spirit is what drove the strategic decisions that set it up for its current growth. “Our community has always had a special sense of pride in what we call the Tupelo spirit,” says Mayor Shelton of “the story of how our city went from being a very small, very poor community to one that’s thriving now.”

The headquarters effect

Both BancorpSouth and Renasant have been involved in virtually every key moment in Tupelo’s economic history—whether forming the CDF, renewing downtown or recruiting Toyota. “Certainly, we’re competitors,” says Waycaster. “But when it comes to community and economic development, self-interest is put aside. Everyone comes alongside each other to reinvest and make this community better.”

Picnickers at an event in downtown Tupelo.

Likewise, Dan Rollins remembers working earlier in his career at a bank where “you were told, ‘Don’t ever speak to those folks across the street.’” More than six years after moving to Tupelo from Texas, he observes that “that level of competition creates friction, and friction then inhibits economic growth.”

To what extent, though, does Tupelo benefit from having not just the presence of larger banks but of their headquarters? Both Rollins and Waycaster demur a bit on this point. Waycaster emphasizes that as Renasant grows “we will continue to invest in all of our communities. When someone thinks of Renasant across our five states, when someone thinks of a community partner, that thought won’t go back to Tupelo, Mississippi. That thought will go to home. They’re going to think of us as a community partner, no matter where our corporate headquarters might be.”

“We want to be a community bank,” adds Rollins. “We have leaders in the field. We are not making a decision here about what the teams in Birmingham or Little Rock are doing.”

“I think both Dan and Mitch do a fantastic job of being involved in the local community without being what I would call ‘homers,’” says Josh Mabus, the owner of Tupelo-based creative firm Mabus Agency. “Their branches still have that balance of local decision-making while having that beacon in the sky of the principles they uphold.”

But there is something to the idea that a headquarters is different from a branch office. “Back in the 1980s, every city basically had their three big locally owned banks,” says Aaron Renn, who studies economic development as a senior fellow at the Manhattan Institute. “The presidents of those banks were big civic movers and shakers.” In an environment of consolidation—which has cut the number of bank headquarters in rural markets by 45 percent and in cities by half—even larger cities may only have branch banking presences, and “the local manager in charge is not nearly as powerful or influential a person as he used to be.”

The issue is also on the radar of the Federal Reserve. “We hear anecdotally that banks are more attuned to the needs of the communities in which they are headquartered, so the significance of this loss could have an effect on the local markets,” Vice Chairman for Supervision Randal Quarles said in a speech last year.

“Banks are some of the best corporate citizens in any community, because banks are engaging in the civic and community side of that growth. Financially they’re your partner, and then [there’s] the volunteer leadership,” notes Shane Homan. What’s different about Tupelo, he adds, is that “we have corporate CEOs at [midsize]banks that are engaged in it at that level.”

A workforce with choices

Probably the most significant difference a headquarters makes, however, is its workforce. BancorpSouth employs nearly 1,000 people in the Tupelo area out of its approximately 4,500 employees across its nine-state footprint, while Renasant has nearly 400 out of 2,500 employees in Lee County. These employees work out of the banks’ downtown headquarters offices, separate technology and operations centers and local branches. Bank headquarters employees tend to be high-skilled and highly paid: in addition to management, these jobs include credit analysts, accountants and financial managers, marketers, technologists, cybersecurity professionals, and compliance and risk managers, among others. “We’ve been able to get some excellent talent to come here and participate in the growth of our bank,” says Guy Mitchell.

BancorpSouth employees during a community service project.

The Renasant and BancorpSouth teams make up about a quarter of the financial services professionals in greater Tupelo. “We have over 6,000 persons working in the financial and insurance sectors,” notes Shane Homan, adding that they “make $20,000 more than our average wage. It’s a unique opportunity that Tupelo has to be a relatively small market and to have these specialized skills in our market.”

Tupelo has both workforce recruitment advantages and challenges in fair measure. It offers affordable and available housing, quality schools, strong health care and big-city amenities like the arena. But it is still a small city relatively far from larger urban areas. “Hiring in a town of 38,000 versus 3.8 million is a struggle,” says Josh Mabus. “We’ve had to recruit people from all over the country and we’ve been able to do that because Tupelo, when you investigate, is a cool town. It’s worth moving to.”

Mabus Agency is a sophisticated creative agency that handles Renasant’s advertising business and serves community banks across the country. (One point of pride for Mabus: a song by funk band Vulfpeck that the agency found for a Renasant ad was later “swagger-jacked” by Apple for an Apple Pay commercial.) Now with 32 employees, Mabus has worked with Renasant for years, supporting the bank’s growth from $2.3 billion in assets to now over $12.7 billion. Renasant’s expansion has fueled Mabus Agency’s growth.

One recruiting challenge that Tupelo doesn’t face is that in certain specializations, it can be hard to recruit talent to small markets knowing employees might not have options if something doesn’t work out. Tupelo’s financial services cluster—with multiple providers of banking and other white-collar jobs—works in its favor.

“We have manufacturing and other employers that want to locate here, and they’re all vertically integrated,” Homan explains. “They all want those positions from the top to the bottom, and the fact that you have them already here located means there’s other employment opportunities if something falls through, which makes it easier to locate them here. It’s a lot easier to recruit talent when they realize there are multiple opportunities in that community.”

Sunset over Tupelo Hardware, where Elvis bought his first guitar.

‘A terrific advantage’

Tupelo has a powerful economic story—but it might not be an economic recipe. Ten-billion-dollar banks aren’t born overnight, and there’s a huge degree of contingency in how they develop. “The way you get a small community with two large banks is to start with a community with two small banks,” says Rollins. His broader point: the leadership and vision of those banks is a big part of what matters. So is the local market. “The bank is only going to be as strong as the community behind it,” he adds.

It’s hard to construct a counterfactual about how Tupelo would have performed had it not had large and growing local banks. But the comparative performance of other similar markets is perhaps telling. Without two downtown employment anchors, would Tupelo’s center city have remained as vibrant as it is today? Without locally based C-suites, would the city have received the benefit of personal executive investment? Would local businesses have found rates and services as competitive without two strong peer institutions?

Whether it’s the competition factor, the leadership factor or the employment factor, it’s hard to deny that having two midsize banks has been anything but a benefit. “It’s been a terrific advantage to have two and not just one,” says Jack Reed.


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