Southern Bancorp

$2 billion

Arkadelphia, Ark.

Darrin Williams, an attorney and former Arkansas state representative, wasn’t interested when Southern Bancorp, Inc. approached him about a leadership position in 2013. His wife, however, reminded him of how rewarding he’d found it to facilitate a financial principles course at his church.

Williams reconsidered and became CEO of Southern Bancorp, a group of three community development financial institutions (CDFI): Southern Bancorp Inc., the holding company; Southern Bancorp Bank, a $2 billion-asset community bank headquartered in Arkadelphia, Ark.; and Southern Bancorp Community Partners, a $40 million nonprofit loan fund.

Since then, Williams has developed a strong vision of how community banks and CDFIs can partner to build more prosperous communities. “CDFIs are economic and financial first responders for people who are not well served by traditional banks,” he says. “I’m issuing a call to action for community banks and CDFIs to work better together.”

Traditionally, community banks have supported CDFIs through making charitable contributions, providing loan capital to CDFI loan funds or, at the highest range, making an equity investment in a CDFI. All of these earn Community Reinvestment Act (CRA) credits for community banks. However, Williams sees opportunities for more immediate community impact.

Better serving its communities

Recently, Southern Bancorp partnered with $1.1 billion-asset Relyance Bank, headquartered in Pine Bluff, Ark., to better serve low-income borrowers. Relyance is working to increase its mortgage lending but sometimes isn’t able to make loans for some customers.

Williams notes that this often occurs in minority and/or economically distressed markets: Some banks might provide deposit accounts for individuals but then deny them a loan.

That’s where Southern Bancorp Community Partners can be a bridge. The nonprofit loan fund has HUD-certified counselors that provide pre- and post-home buying counseling. “We provide very high touch, hands-on financial services and counseling,” Williams says.

Under the newly launched partnership, Relyance refers customers to Southern Bancorp Community Partners for counseling. “Our counselors work with them for a time, get them ready to purchase a home and then send them back to Relyance,” Williams says. “That’s the way that community banks can work with CDFIs that provide those financial development services. We hope to partner with other community banks in our service area.”

He points out that under this model, the community bank is not giving up a customer. Instead, it is turning a denied loan into a funded and potentially profitable loan that affects its bottom line.

Williams adds that demographic shifts forecast a growing minority population. “That’s a large opportunity for clients,” he says. “If community banks want to continue to grow, they’d better figure out how to better serve that segment of the population. CDFIs are closer to these communities and know how to serve them. Partnering with a CDFI is a good way to start.”

Williams recognizes that gaining CRA credits has traditionally been the incentive for community banks to work with CDFIs but hopes that banks will also embrace the importance of proactively serving segments of the community that are often left out.

Closing the gap

In the wake of the murder of George Floyd and the subsequent national unrest, Williams talked with other business leaders about ways to close the racial wealth gap.

In Dec. 2021, Southern Bancorp partnered with $23.2 billion-asset Simmons Bank, headquartered in Pine Bluff, Ark., to launch the Minority Business Empowerment Fund. The fund will provide minority entrepreneurs with small business loans and technical assistance, such as financial literacy and business skills. The pilot project is based in Little Rock, Ark., but Williams hopes to scale beyond Southern Bancorp’s footprint.

Williams believes that access to more comprehensive banking services and economic empowerment is crucial to building thriving communities. He cites findings from the Pew Charitable Trust that Americans who move out of the bottom quintile of poverty had greater savings, wealth and home equity than those who don’t manage to move up. That’s where CDFIs can make a difference.

“We were founded to be wealth builders for everyone,” he says.

Southern Bancorp’s sustainability focus

In its quest for innovation, Southern Bancorp has affiliated with the Global Alliance for Banking on Values (GABV), a network of independent bankers that seeks to use finance to deliver economic, social and environmental development. “We want to support people, not just synthetic products or derivatives,” says Darrin Williams, Southern Bancorp CEO and North American representative on the GABV board. “We want to help people create businesses, put people in homes and lift their financial feasibility.”

Williams explains that the involvement with GABV has impelled Southern Bancorp’s leadership to find ways to reduce the bank’s carbon footprint. He points out that many community banks are in older buildings with aging HVAC and lighting systems. Southern has ordered an audit of its utility bills and is tackling areas of least efficiency, starting with installing programmable thermostats. Southern Bancorp is building a new corporate headquarters in Little Rock, Ark., and a priority of its design will be energy efficiency.

Over the longer term, Southern Bancorp’s leadership plans to score its loan portfolio for carbon emissions. Williams sees an important role for financial institutions in promoting sustainability and recognizes that such a role will have to evolve. “This is a marathon, not a sprint,” he says. “We want to encourage our borrowers to think about the planet, and we want to encourage products that support sustainability.”