John Hairston, CEO of Hancock Whitney, joins Ricky

Very well, Ricky. Thanks for the extravagant warm-up. And you know, one thing I'll say about humility is that people who can exhibit humility are the ones who made enough mistakes to be humble. I think it's an acquired skill sometimes.

We wouldn't learn if we didn't make mistakes. I mean, making mistakes is the key to success, isn't it? Well, it's how you build character and it's how you build wisdom and knowledge. And when it gets to courage, and I know as we were talking pre-show today about some of our Katrina, Hurricane Katrina experiences, when you get to courage, you know, the old western movies a lot of times the plot would have the hero in the story maybe not exhibiting enough courage through the show until it really counted there towards the end of the show with the buildup, and they exhibited all that courage. And I think maybe sometimes community leadership is the same. You don't have to be courageous every moment of every day, but when it counts, I mean when it really matters, you have to be prepared to maybe take a little flak to stand for something that's going to be meaningful for decades in the future. And some of those we got done in Katrina, some we probably could have pushed a little harder, but all in all, I think the community did a magnificent job recovering from what at that time was the worst natural disaster we'd ever had in the history of the country.

I think I agree, and I feel the same way, Ricky. In fact, I think the Katrina story and maybe the stories of some of the people that were really the leaders of that recovery, those are the stories that you use to help develop the next generation to be prepared for the types of obstacles that come. Hopefully not hurricanes of that nature, but there's always bad news, and how you deal with it is what separates good from great sometimes. So I share, when we're doing young leaders in banking, just did it two weeks ago at the LSU Graduate School of Banking, where you're telling the story of Katrina and our company's experience with that, trying to exhibit the need to have a culture that understands your values, because you may not be able to communicate sometimes as well during different disasters. But if everybody understands how we measure good judgment versus not, they're generally going to make decisions right 90 or 95% of the time, even if you don't have an effective chain of command because of communication outage.

Well, you know, there were a lot of attributes. I guess every cloud has a silver lining, right? And coming through the storm, the need to make field-level decisions that were really above your pay grade was not unique to me and you. This happened all over the coast and through many businesses and elected officials that we just had to make the best call we could make. So it was a good development exercise. I remember, you know, one moment in time, with George having just passed a few months ago, I tell a lot of George stories because it's on my mind. But I can remember borrowing machines from Trustmark Bank in Jackson. We had lost our entire back of the house, and there were these machines that we needed to do our work. Our staff were in Atlanta and they couldn't come home to tend to their homes because that's where we had our backup center. And Trustmark was kind enough to loan us some of their machines so we could bring our people home. And the building we put them in, the next door building caught on fire five hours after we put them there. Billy Hewes, who at that time was the Senate pro tem, now the mayor of Gulfport, drove up to Jackson in the middle of the night with me in a box truck. We carried those machines down the stairs at that bank, installed them in a temporary building, ran cable to them. And I was so excited to tell our people, 'You can finally go home.' And then I got a radio call at 3 in the morning that the building was on fire. Turned out it was the building next door, and George was helping with Chief Sullivan direct the fire hoses over the building so I and a few of my colleagues could run in and out of that building under the arcs of the water to carry those machines out, still in the shipping plastic we had them in, so we could bring our people home the next day. That's not the kind of thing you do every day as a banker, but I can remember the lessons learned during that time. And one of my favorite pictures hanging on the wall of my office is a picture of George and I standing together after being up all night doing that. I'm not sure who looked older, me or George, but I think it was me.

Yeah, yeah. George was born at a tough time in his family's history. His father died when he was a little boy, and George ended up being the primary earner of the house when he was 14, selling vegetables in central Gulfport along Highway 90 at the marinas. And that builds a lot of character and a lot of responsibility. He worked hard his whole life. In fact, the night or the early morning that he passed, George was in his early 80s and he was still pretty vigorous. But like many people, I didn't want him falling off a ladder at 82 and breaking a hip or a shoulder and setting him back. So he would go down to our vault where we have all our archives, and we were putting together 125th anniversary activities for coming up in October. We were looking at archives that we would display the month of October. And I told him, 'Please don't go to the vault by yourself and get up on the ladder. If you fall, it might be two days before anybody knows to look for you there.' He said, 'Right, okay, I will, I will.' And I was traveling, and my team member Jennifer here called me when I was traveling and said, 'George is in the vault again. I'm sure he's on the ladder.' And I told him, 'Just tell him don't get on the ladder. Identify everything and I'll be there in the morning and we'll go through it together.' And then he passed. So yeah, sad. I didn't get to have that Friday morning meeting with him. I'll always regret that we missed.

Yeah, he was. Well, you know, Leo taught me a lot about the banking business, and George taught me a lot about life and about people. A lot of my best lessons were from that time. And George, given his level of maturity, he was born in 1940, so he was kind of a World War II baby, if you will. Many of the characteristics of the Greatest Generation, George also displayed. So he was a lot like my dad. My dad was a little younger than George, or older than George, but they said a lot of the same things. So when I lost my dad, George kind of became that mentor about life to me. So some of my sweetest memories are some of the lessons about people and marriage and fatherhood and how do you work with people. But I give him and Leo pretty much equal marks, but on two different subject matters.

Yeah, and the notes were on eight and a half by 14 legal paper, front and back. So he didn't waste any paper. Remember that? You've gotten a few of those notes yourself.

Glad to share it. It's actually a pretty good American business story. We were founded as a fledgling organization in downtown Bay St. Louis. Not long after, the same investors put together another small bank in New Orleans called the Bank of Orleans. That Bank of Orleans eventually became part of Whitney, and Hancock County Bank became Hancock Bank. And they were very close organizations over a period of time. So no small wonder a hundred years later, Hancock and Whitney eventually got back together, if you will, to become the named company we are today. But the big catalyst for our growth was Katrina. We went into that storm as a, I guess you'd call it in the business, we call them super community banks, larger community banks, at about $3 billion. And four months later, we were $5 billion. And two years later, we acquired a bank in Florida that was a failed bank in Panama City and became $9 billion. And then the Whitney transaction happened and we became $18 billion. That was in 2011, we closed that deal. And they've doubled since that point in time. So the footprint is from as far south as Sarasota over to Jacksonville, the far eastern part of our franchise. We have offices in Atlanta and Nashville now that are specialty lending offices, all the way over to Austin and San Antonio. But the headquarters is still right where it's been for the better part of 100 years in Gulfport. It's an amazing story.

That's the game, right? If you can be in a strong position when periods of weakness occur, then whoever's got the strength, particularly capital, to do it is the winner and you grow. So most of our big growth has, as you said, happened during the worst of times. But all that credit goes to the team. My job is I'm kind of like the traffic management guy. All the talent is in the team down the chain of command. And I've been blessed with some very tenured, extremely talented, and wildly committed and passionate people who believe in the company story and believe in the values that the company has clung to now for 125 years in October. So the credit goes to the team. I think a better CEO might have a hundred billion dollars right now versus 35, but we've been very fortunate to have some super people, and clients have stuck with us during some of those difficult times.

So the coast is unfortunately not a really high growth market. Part of the reason for that is just simple geography. We're not a circle, we're a line. We're 40 miles long and we're only about eight or ten miles thick. So as a result, it's kind of hard to get the growth outward that you naturally get in a 360-degree circle because we've only got 180 degrees of physical latitude to work with, and a lot of it's water. So we have some challenges there. But the biggest need we have to grow the economy of the coast is technology manufacturing, information, clean industry with a little bit, maybe 30-40% mix of heavy industry. We are a good market for labor. The talent that comes out of our high schools is as good as anywhere in our whole footprint, if not better. People here tend to stay at the same employer a little longer, and we've got a healthy mix of skills and experiences coming into the market primarily through the military. So we're sort of readymade for growth. And if I could wave a wand, and this is probably not the best political statement to make, but it's just simple reality, if we could ever get the municipalities, the counties, and our various economic development organizations truly in consensus about how and where we're going to grow our economies, partnered with a statutorily empowered MDA, we can make magic happen on the coast. And I believe it'll happen one day. It's just tough because we're three counties, and those counties have different priorities. Sometimes elected officials or business people get so focused on our particular little part of the pie that we miss the opportunity for the larger corpus of growth opportunity. So it's a cold spring if we can ever get that solved.

Yeah, I think we're the 800-pound gorilla that doesn't know it. And if you look at the panhandle of Florida, they did a particularly good job during the financial recession of yelling at the top of their lungs, 'We're open.' So there was this massive influx of people that came and stayed for quite a while during the pandemic, and a lot of them decided to stay and make investments there or move their businesses or set up parts of their businesses there. So one of our fastest growing markets is actually the panhandle of Florida, which looks a lot like us here on the coast. So I think there's a wonderful opportunity here. And what I said earlier about getting consensus, I don't mean merge six counties. I mean have thought leaders develop inside those counties that think, 'Okay, I've got my local plan, and I'm going to have my region plan, and I'm not going to cheat the regional plan just to go deal with the local one.' And start making some of these bigger investments. I'm afraid we're going to look back 30 or 40 years from now and realize that we missed one of the greatest opportunities to use all that Deepwater Horizon money for big things to really move employment and education forward on the coast. And it's the last of the free money, so to speak, that we'll be able to deploy. And it's been really tough to see. I'm not saying the money's been misspent, I just don't think it's been spent on those things which generate the biggest kick over 30, 40, or 50 years.

It is, and it's a long-term consensus, and it's not without risk. Unfortunately, and this is unfortunate, but we've had our share of bad luck. While Katrina left behind a few gifts, it was a massive and destructive event that upended a lot of the development we had going on. And then Deepwater Horizon was the same sort of interruption. So we've had our share of bad luck, and I think we've done a terrific job as a community. Credit goes to elected leaders, to business people, to all the people that stepped up during those times to recover as quickly as we did. So I'm really thinking more about the peacetime plan, without these big huge events that sort of get in the way of our thinking sometimes, to think through what the definition of success looks like 25 years from now. And I think that's the part. You think about giving up a whole bunch of taxable land to create a Space Center. The people that did that didn't live long enough to see the real payback. The implementation of the Ingalls Shipyard expansion, the Chevron refinery being one of the largest in the country, maybe the largest in the country, those things didn't immediately just catch. It took whole decades for it to grow and scale up to these monstrous beneficial implementations that we have now. So I guess I'm thinking about what are those big things. Gaming is an industry that we didn't have, at least we didn't have taxes on it pre-1990, but now it's the anchor of our hospitality industry. So starting to think about the next 20 or 25 years, what is that next two or three big catalytic events that occur to create a very robust economy? Because I'll tell you, the education system is top-end. I would compare our public education system to any public education system in our footprint. The quality of the workforce, the work ethic, the character of the workforce is just as good or better here than anywhere else in our footprint. So some of those ingredients that you really wish you had, we already have. So I think it comes down to us as leaders thinking about what we want two decades to look like down the road. That's hard to keep focus on when we have so many other distractions in our lives, but it is what it is.

Well, Mississippi as a state, and I know there are others in the country that do a good job with this, but Mississippi as a state is a top performer in terms of community education, between senior level university and high school. And that's not only as a bridge to senior but also for vocational careers. And we really are particularly good at it. And as you said, Mississippi Gulf Coast Community College has really made a growth strategy out of vocational assistance and program assistance for some of the larger employers. And we're going to need more of it. I'm telling you, as an employer, we have hundreds of jobs across this country that I would love to have here if we could just find enough people to go into those roles. Because of some of this lesson learned from Katrina, not having everything in one building like we did in the old days, but there are concentrations of staff we have around the country in pockets that are there because it's hard to find those skill sets here. Well, every time the coast gets bigger, the ability to attract those types of people gets better. And from a quality of life viewpoint, I think when I left here in 1981 when I finished high school at Gulfport High, I never dreamed that I would have an opportunity to come back home. I was getting my degree in chemical engineering. There were really only two places to go, which was in those days Dow or DuPont, which became Chemours and now Chevron. Those were the only two games in town for chemical engineers. It's much broader than that now. And the quality of life then wasn't nearly as good as it is now with all these different features. And I know we were talking before the show, just the bridges rebuilt after Katrina have become attractions by themselves because of the walk path that joined the three counties together. The boardwalk in Harrison County, not a morning goes by, I don't care how early I come to work, if it's daybreak, there's a hundred people walking on that boardwalk. So it's not a bad place to live. And I think as we get more of our high school talent that goes off to school and decides to come back, that's going to provide more opportunities to improve our workforce, or at least our volume of workforce here.

It is. And look, nobody ever gets all their citizens to love whoever your governor is at one point in time, but you have to acknowledge the last three governors that we've had have all put a significant portion of their time into economic development. Governor Barbour was tasked with the recovery of Katrina, but we made hay even with that. So I think we've had three successful governors at growing opportunities for employment in the state. And the Amazon and the general amount of technology-related investment in the Metro Jackson area is enormously impactful. I mean, we needed that catalyst. We needed something to put that market on the map. And that degree of fiber optic capacity and having implementations that are technology related in our state, particularly in the Jackson area, is enormously impactful for the future. I can tell you, I get questions when I'm on the road from people that, when they would ask me about Jackson, it was about some of the advertised or media-covered water challenges we had, sometimes law enforcement issues that we've had. Now they're asking me about this sudden focus of IT in Jackson. 'What is all that about?' That's good press to have for the state and particularly for the Jackson area.

No, I think the only thing I guess to cap it off, depending on which census information you believe, I'm either a sixth or seventh, maybe even an eighth generation Mississippian. Some of the family documentation gets a little weak, but it's been a couple hundred years that there have been Hairstons roaming about, or Harstons as we recall back in those days, around the state. And there were things about our history that I wasn't proud of, and I'm still not some of those moments. But I have a lot more to be proud of as a Mississippian. For my lifetime, born in Mississippi, we've done so many things right the last 20 or 30 years, and I'm really proud of the state that we seem to be becoming. So moving on to the footprint, across our area, generally the southeastern United States has been the winning region of the country. The pandemic, I think, exacerbated that goodness. With really just one or two exceptions, even the larger MSAs in the Southeast opened up pretty quickly and robustly, and I think they were the recipients of all that inflow of traffic. People that wanted to go to the West Coast or New York to show or whatever couldn't go because they simply weren't open. So they came here. And as you mentioned earlier in the show, a lot of people buying homes are not from here, but they're moving here. And some of that is because the price points are a little better in Louisiana, Mississippi, and Alabama. The price points for houses are better. You get more for your money than you do in historically high tourism areas like South Florida.

Well, the macro environment is going to be the primary driver of good or bad in our region. I think our region is ahead of the rest of the country in most ways. But the two biggest influencers, the word influencer means something different now, Ricky, than it did when you and I were kids. So to hijack that word for this point, there are two huge influencers that will drive the trends in the southeast part of the US. One of them is interest rates, and the second one is consumer confidence. As we sit right now, the rate environment has been somewhat viewed as volatile, but it really isn't. Our interest rates we have right now are actually below what the 50-year median is. But we went through 20 years of interest rates being basically zero, so there's kind of a shock to the current generation. For five, six, or even eight percent money seems high when you get into mortgages or business investments. Rates are not going to go down soon. Just 90 or 120 days ago, the various economists that make up the CME futures forecast for funds rates overnight, I believe we'd have six rate decreases in 2024. That was never going to happen. We viewed most of that as being three. So as we sit right now, the expectations are that interest rates will not go down until September, at which point they'll go down about 25 basis points. And within a year, we should see rates down 50 or 75 basis points. That's not a lot. So I think we're going to buckle in here as an economy for interest rates that are maybe within 100 basis points of where we are right now, unless the economy heads into a slide. And if that happens, it'll be because of that second influential topic, which is consumer confidence. People still feel pretty good. They're grumpy. I think we're all grumpier than we went into the pandemic feeling. We're a little short-tempered compared to 2019. People argue about politics and what's going on in the global military arena and all sorts of different manners, but they don't necessarily feel afraid right now. So they're still spending money, taking vacations, trading up their cars, all that sort of thing. Not at the crazy clip we had two years ago, but still a very solid pace. The Fed desires to get to a 2% inflation rate. There are lots of inflation factors, but we're about at 2.8 for the one they look at the most. It's heading down towards two, and we still have robust creation of jobs, although it is peaking. So the two big influences are consumer confidence and interest rates. Rates will get better, but not a lot, unless things go to a worse place. So the three predictions I'll give you, Ricky, you heard it here first on your show. There are three things that are going to have to happen over the next several years that are pretty monumental. Whether they're good or bad is subject for debate. Number one is the United States government basically bailed us all out, businesses and individuals, during the pandemic by borrowing money to put in our various pockets to keep the economy going. It shouldn't have been necessary because we shut down too hard and too long as an economy, but hindsight is 2020. We issued trillions and trillions of dollars of new debt. The government's got to pay interest on that debt, and it's at the current rates, not the zero environment that we had a couple three years ago. So as a result, about 50% of all of our collected tax money goes to servicing the current debt that we have. So government spending will have to come down, or taxes have to go up. So my three predictions are: over the next few years, doesn't matter who the president is going to be or the president after that, we will see tax increases. It'll happen primarily for the wealthy and for businesses, and then it'll drift down to the middle class if that's not enough. But that's going to have to happen because we simply have too much debt. Number two, we will see a need for more people to join the employment workforce that are capable of working. So the benefits for people that are not working will likely go down if they're able to work. I'm not talking about retirees and individuals who are physically or mentally, because of illnesses or injury, not able to work. But for employable people, the benefit to not work will go down to encourage them to rejoin the workforce and therefore become a net producer of taxes versus a net user of taxes. And then the third thing that's going to have to happen is the amount of investment back in the infrastructure of the country will be curtailed for a period of time. So as a result, we're going to go through a period where for 20 years the government's been doing massive projects around the country, not going to have the cash flow to do that unless we see a huge change in the macroeconomy that I really don't see coming. So I think that's probably what we're going to see. And I'll give you the fourth bonus prediction. That is the need for jobs, the need for people to fill jobs, is going up at a pace that the birth rate doesn't support. So the only answer to that is immigration. The country will sooner or later realize that we need the proper level of immigration right now to fill the jobs. It's just too high in the percentage of undocumented, therefore unemployable by businesses like yours and ours. But we desperately need people to man those positions. So we will see a reasonable, I think practical, enforceable immigration reform that makes it easier for legal people to immigrate to the US and be employable, and harder for people to illegally immigrate and actually get benefits that are costing the taxpayers.

Well, thank you. We've been dealt a good hand by the economy and by the markets we operate in. We've been very blessed to come out of some of the difficult times. We're better capitalized than we have been in 50 years. I'd like to have better growth than we have right now, but people aren't borrowing as much as they used to borrow two, three years ago. But I think what we'll see happen is continued growth over time. And I think I may have said on one of your shows a few years ago that if I look at the top 25 banks in the Southeast 25 years ago, 20 of them are gone. So we're one of the 25, one of the five still left. When we look at that list, my expectation is that 25 years from now we're still here and as a result have to be a much larger organization. Mississippi needs some strong banks to propel the state forward, and Hancock Whitney plans to be one of them.