CMS Case Study
Jackson County and Northeast Alabama Economy :
GDP Alabama’s Real GDP contracted by 4.8% in Q1 2020 after increasing by 2.4% in Q4 2019. For all of 2020, Alabama’s real GDP is expected to contract by 5.0% or a full percentage point less than what is expected for the National GDP. Unemployment Rate The bulk of the bank’s loan portfolio is comprised of loans to individuals or businesses in Jackson County. The county’s unemployment rate as of July 2020 was 7.1%. In July 2020, the county’s labor force stood at 40,087, with 37,233 being employed. The State’s unemployment rate was 7.5% as of June 2020 or below the national rate by 3.6 percentage points. YoY, the State’s unemployment rate increased by 4.6 percentage points. Inflation Rate (CPI) The CPI for the South Region increased, YoY, by 0.3%. This increase is 0.3 percentage points below the YoY increase in the National CPI of 0.6%. Thus, there appears to be no inflation concerns at present. Sales Tax & Housing Data It should be noted that the State University’s (SU) economic update has not been available since March 2019. As such, sales tax data is not readily available to the Bank. The focus here will be on housing data. Housing data for the county as of July 2020 reflects demand is up, YoY, by 22%, while supply is down, YoY, by 41%. This decline in supply has bolstered the local residential construction/building and materials industry. Median Sales Price for the county is $175,000 versus $186,500 a year earlier. Average Sales Price, however, stood at $229,608 in July 2020 versus $205,144 in July 2019. Days on market stood at 61 versus 69 a year earlier. Months of Supply has been cut in half going from 3.7 months in July 2019 to 1.8 months in July 2020. All of these metrics seem to suggest the housing market is very strong in the county. Summary Due to the current pandemic, both the US and the local economies are in a recession. How long and how severe the recession will be is unknown. Multiple variables have the potential to shorten or lengthen the current recession – the successful development, or lack of thereof, of effective medicine to combat the virus; businesses reopening at full capacity or remaining closed or at half capacity; and the continuation or discontinuation of government stimulus efforts. In 2019 we witnessed a major accomplishment for our Bank: we are now the #1 bank in Jackson County as measured by deposit market share as of June 30, 2019. Since our inception we have displaced several regional and super-regional institutions including the largest institution in Alabama. This achievement has been and should continue to be celebrated but we cannot rest on our laurels. Our market share is not as strong in the other counties in which we operate. While there is strong competition from other community banks in these counties, many of the larger banks have presences there which creates opportunities for us to grab more market share. C. Market Analysis
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