Homeownership, saving, and keeping a job are three keys to financial well-being and moving out of generational poverty, so that’s what Southern Bancorp is focusing on in its region of. originated from the Mississippi and the Arkansas Delta, one of the poorest in the country. Southern CEO Darrin Williams talks about the bank’s focus on pairing in-depth financial advice with a Bank On Certified Checkless Checking Account to help reach the unbanked in the Delta. A former securities attorney and state lawmaker, Williams joined Southern Bancorp in 2013. In 2020, he became a leading advocate for funding coronavirus relief in rural America and was recognized by Bloomberg as one of the 50 Most Influential Global Business Leaders for 2020. Listen to the full interview.
QTell us how Southern Bancorp got started.
AWe are really at the genesis of the CDFI Fund itself. We were founded in the mid-1980s by the government of the day. Bill Clinton, looking for ways to boost economic activity in the Arkansas Delta region, one of the poorest communities in the United States. It had a largely agricultural base when cotton was king. It was a vibrant community, but as the farms became mechanized we didn’t need so many people to harvest, and over the years people left this community in great emigration. . There wasn’t a lot of economic activity, so he was trying to find ways in the 1980s to stimulate activity.
He probably came across the country’s first development bank, a bank called South Shore Bank on the South Side of Chicago. Shore Bank was founded to truly focus on racial equity, intentionally operating in South Chicago because it has seen this community suffer from redlining. What Governor Clinton saw was that this bank was making huge strides: homeownership rates are increasing, small business start-ups are increasing, jobs are being created. And he said, “Dude, if it works in an economically depressed urban environment, I wonder, will it work in an economically depressed rural environment that is also largely African American?” “
As governor, he attracted several philanthropic and business leaders. Rob walton [son of Walmart founder Sam Walton and former Walmart chairman]was on our first board of directors and the Walton Family Foundation was an early investor in Southern. The Winthrop Rockefeller Foundation [founded by Winthrop Rockefeller, former governor of Arkansas and son of John D. Rockefeller Jr.]was also one of the founding shareholders, and the Walton Family Foundation and the Rockefeller Foundation are still the organization’s largest investors. People came together and created this organization, with about $ 10 million in seed money. And today, we’re at $ 1.6 billion in assets serving 49 locations in Arkansas and Mississippi.
And when Gov. Clinton becomes President Clinton, he takes his job with Shore Bank and Southern and says, “I want to create a fund in the Treasury Department that will be a public-private partnership and allow for investment in banks by institutions that really want to. serving underserved areas His idea was to have 100 of these banks across the country.
QHow is Southern Bancorp working with other banks, both in your footprint and outside your footprint, to address some of these financial inclusion challenges in the Delta?
AWe are proud to work with several different partners. We always say we’re not the only game in town. We want to partner with anyone who wants to partner with us. What’s unique about Southern is that we are really more than just a bank. We are really three CDFIs in one. So we have the holding company, the $ 1.6 billion bank – the two CDFIs – and then we also have a 501 (c) (3) CDFI loan fund in the bank: Community Partners.
It offers low cost loans, but it also provides really very relevant financial development advisory services. We will have licensed homeownership advisors there. You know, very rich people have wealth advisers. People with low incomes also need wealth advisers. And so these advisers are more like wealth advisers.
Our work focuses on building a network around three strategies: Home Ownership, Job Training and Retention and Saving, as these three elements have been proven to help increase value. clear. All three lift a person, a family, out of generational poverty.
We have partnered with a number of people, including other banks in our region, to do this. We have several banks that have interests in the South — Bank of America, BancorpSouth, Regions Bank, Simmons Bank. Of course, they receive credit under the Community Reinvestment Act for these equity investments and receive a regular quarterly dividend.
They help us expand our impact and reach. We have other family foundations and philanthropic investors. We also have ordinary people who have invested in our organization, people who really care about the impact, and therefore we provide a very important social return, really helping people out of poverty. We also offer a solid financial return.
Since the loan fund does not have a deposit base for which it makes loans, it receives program related investments, so an individual, organization or company usually gives a loan at very, very low interest rate. It could be $ 10 million over 10 years and then the loan fund will take those dollars and lend them back into our footprint to deserving clients. Spread is what keeps the nonprofit operational. Since the loan fund is not a regulated bank, we can be very flexible in the types of loans and the underwriting criteria we make.
QHow do you reach the unbanked and help overcome suspicion about the banking industry?
AIn Mississippi, there are more payday lenders than McDonald’s, Burger Kings, and Starbucks combined. So we have to try to meet our customers where they are and try to put them at ease to enter a bank. Our credit counseling is actually for people. We run financial education classes and workshops in churches and community centers, and one-on-one with the people we serve.
We are also part of the Bank On movement. Our Bank On certified product is a chequing account without a check. You cannot overdraft this account. It is a good way for people to enter or re-enter the banking space. A common reason people are unbanked is that they don’t trust banks; they don’t quite understand the fee structure. And so with this product, for a very, very low price, you have access to our mobile products, our depository products, all the things that any fully banked person would have, but you know exactly how much it’s going to cost. So we try a number of ways to meet clients where they are and invite them into the banking space, because we know that a basic bank account is really the foundation for building wealth over a lifetime. a person.