Southern Bancorp thrives during pandemic as one of nation’s premier community development banks

November 9-15, 2020

By Wesley Brown


When Americans celebrate the New Year on Jan. 1, 2021, most will breathe a sigh of relief that 2020 is in the rearview mirror.


But Southern Bancorp CEO Darrin Williams almost apologetically describes 2020 as a year of opportunity for Arkansas’ largest Community Development Financial Institutions (CDFIs) amid the COVID-19 pandemic. Citing remote education and work environs, nationwide protest and civil unrest over racial injustice, and a Nov. 3 election that threatens to pull the nation further apart, Williams said Southern has thrived in these difficult times.


“Clearly you hate the circumstances  that put CDFIs like Southern in the (spotlight), but we would be derelict in our duties as stewards and fiduciaries for our shareholders if we don’t try our best to take advantage of the opportunities that are before us,” said Williams, who was named Southern’ s chief executive in 2012. “But hopefully we can use this to create positive impact of the communities we serve.”


Founded in the 1986 by then Gov. Bill Clinton, Walmart Chairman Rob Walton, the Winthrop Rockefeller Foundation, former Systematics Inc. Founder Walter Smiley and others concerned about the economic decline of rural Arkansas and communities of color, Southern is nearing its 35th year in business. 


Today, Williams oversees the strategic direction and operations of three Community Development Financial Institutions collectively known as “Southern.” They include Southern Bancorp Inc., a bank holding company; Southern Bancorp Bank, one of America’s largest rural development banks; and Southern Bancorp Community Partners, the bank’s nonprofit development finance and lending arm.


Williams came into his position at Southern after serving as managing partner at the Little Rock law firm of Carney, Williams, Bates, Pulliam & Bowman, PLLC, where he focused on representing institutional investors and consumers. He also served three terms in the Arkansas House of Representatives, famously working as the state’s first black House Pro Tempore and Speaker-designate before Republicans took control of the legislature ahead of the 89th General Assembly in 2013.


Under Williams’ direction, Arkansas’ largest certified CDFI has over $1.6 billion in assets, more than 80,000 customers and has originated over $4 billion in loans through 49 branches and loan production offices in Arkansas and Mississippi. In a wide-ranging interview with The Daily Record, Williams highlighted a series of major events in 2020 for the local community bank whose company’s tagline is “A bank on a mission …”


“In the wake of the disproportionate impact of the pandemic on communities of color and the aftermath of the George Floyd, Breonna Taylor and other (protests), I would say that the business community – they have really stepped up and paid closer attention to issues of systemic racism, structural inequalities in society and just  the growing wealth gap,” said Williams. “And now they are making bold moves to really try and dismantle the systems of inequalities in America, which is kind of in line with what CDFIs were found to do when we were (created) back in the mid-1980s.”


In a year that has bolstered the bank’s mission and financial might, Williams pointed to several key events in the tumultuous year that has allowed Southern and its team of 400 employees to hit their stride. Prior to the pandemic, Southern raised $34.7 million in new common equity in the capital campaign at the end of 2019 when other rival community development banks saw little demand for such offerings.


Under that campaign, a private placement offer was released in July 2017 with a price set at 130% of the tangible book value of the company’s common stock. According to Southern officials, more than 100 screened investors were solicited during the campaign. At its close on Dec. 31, 2019, Southern had common equity capital from 36 investors and all company directors and executive officers of the holding company and banking subsidiary became shareholders.



Southern at forefront of nation’s CDFI coronavirus relief


Still, after COVID-19 was declared a global pandemic in March and sent the U.S. and Arkansas economies into a deep freeze, Southern and other smaller banks had to quickly regain their footing to serve their personal and small business customers. In early April, days after Congress approved the $2.2 trillion Coronavirus, Aid, Relief and Economic Security (CARES) Act on March 27, Williams joined CEOs from some of the nation’s largest financial institutions on a video conference with President Trump, Treasury Secretary Steve Mnuchin and other administration officials to discuss the banking industry’s responses to COVID and its efforts to administer the PPP fund.


During the meeting, Southern was the only CDFI on the President Trump’s call, which included Goldman Sachs, Bank of America, JP Morgan Chase, Citigroup, MasterCard, Visa and Wells Fargo. Williams told the president then that Southern was focusing most of its work on building wealth in low-to-moderate income communities. 


Williams also requested from Trump and other top administration officials that future stimulus aid include carve out funding for CDFIs, with a proven track record of promoting economic stabilization, job preservation and job creation in the hardest hit rural, urban and Native American communities.


“I am honored to join the leaders of some of the nation’s leading financial institutions, corporations, and nonprofits in this collective effort to chart a national path forward for our economy following the coronavirus pandemic,” Williams said after the White House’s virtual meeting.


That important call occurred exactly two weeks after the SBA launched the $350 Paycheck Protection Program (PPP) on April 3. By that time, SBA officials nationally and locally had sent out notices to Arkansas banks, lending partners, clients, local and state policymakers, and others on April 17 that PPP funds had completely dried up.

Despite processing those thousands of PPP applications in Arkansas, several small business trade groups and advocates protested that many SBA-approved banks and financial institutions processed the biggest loan amounts from preferred corporate clients and publicly traded firms first because they increased origination fees. The National Federation of Independent Business (NFIB) also said 90% of its members surveyed in all 50 states they were unable to secure PPP funding in the first round.


In late May, after Congress had approved a second round of PPP funding for another $300 billion, SBA and U.S. Treasury officials announced they were setting aside $10 billion of PPP funds to be lent exclusively by CDFIs.  In the aftermath of the shaky launch for the COVID-19 emergency relief fund, Williams said Southern originated 1285 PPP totaling more than $111 million.


“Many of these businesses told us ‘but for that capital at that time, they would have had to lay people off,’ ” said Williams of the program that handed out more than $3 billion to nearly 42,000 Arkansas businesses. “That was kind of the purpose of the Paycheck Protection Program to keep people working and to keep paychecks coming.”



Southern, Bank of America form partnership


Southern success as the go-to bank for minority, women and black-owned businesses entrepreneurs was followed up by Charlotte, N.C.-based Bank of America’s announcement in early September that $50 million in direct equity investments to CDFIs and several of the nation’s top Minority Depository Institutions (MDIs). That financial promise was part of the nation’s second largest bank’s $1 billion, four-year commitment to advance racial equality and economic opportunity first announced amid nationwide protests following the George Floyd shooting on May 25.


Nearly two months later on Oct. 26, Bank of America announced it had decided to direct its early $50 commitment toward acquiring approximately 4.9% of common equity in 10 CDFIs and minority-owned banks, including Southern Bancorp. Bank of America CEO Brian Moynihan said the equity investments would foster benefits across multiple states and in the communities were CDFIs and smaller minority banks serve through lending, housing, neighborhood revitalization, and other banking services.


“By providing equity capital to minority depository institutions, critical projects can be scaled. MDIs are closely connected to the needs of their communities, and these investments will help transform and enable more positive change and economic opportunity,” Moynihan said in a statement.


Bank of America officials told The Daily Record that equity stakes in Southern and the nine other community and minority-owned banks is in addition to bank giants nearly $100 million in deposits in MDIs. The Charlotte, N.C.-based banking giant, which hold nearly $2.7 trillion in assets, also operates a $1.6 billion CDFI portfolio with Southern and 255 CDFI partners across all 50 states.


Noting the Bank of America partnership, Williams said the equity stake allows the Wall Street banking giant to put “skin in the game” with Southern to serve minority and underserved communities. According to the U.S. Treasury Department, there are approximately 250 MDIs and CDFI banks insured by the FDIC with combined capital of less than $40 billion. Consequently, modest investments at any one of these institutions can have an enormous impact on their operations and the communities they serve. 


“Quite honestly, most banks in America don’t need deposits. What you really need to grow is capital, and because of the power of leverage in a bank, equity investment in bank can be leveraged anywhere from five to 10 times,” said Williams. “So, recognizing the need to grow and that banks have abandoned small communities that we serve, … including rural areas and communities of color, this equity capital that Bank of America has provided in addition to the $35 million in capital we raised priors to this investment is growth capital for us.”


Williams added Southern’s board of directors and executive team already have plans to put Bank of America’s equity stake to good use. Over the next decade, Williams said the fast-growing Arkansas-based CDFI hopes to double in size, pushing total assets well beyond $3 billion.


 “We now serve 49 locations throughout Arkansas and Mississippi, and we’ve been engaged in a capital campaign now for grow and we are now looking to grow probably in pretty much any (locations) in Texas, Arkansas and Mississippi and we are now looking at ourselves as a Mid-South player,” said Williams, adding that “Bank of America owns part of the company.”



Arkansas’s first ‘Black, Brown’ venture fund


In addition, Williams recently announced the state’s first multi-million-dollar venture fund for black-and Hispanic-owned businesses and investors during the recent virtual Black Founders Summit on Oct. 22, sponsored by Little Rock-based ReMix Ideas Inc. That event, founded by ReMix Ideas CEO Benito Lubazibwa, brought together over 100 black-owned businesses, entrepreneurs, policymakers and local and state government officials in a first-of-its-kind virtual event to support black businesses that have been negatively impacted COVID-19.


William  – who has appeared on several national financial news show, including Fox News Business and Bloomberg Markets,  to discuss the bank’s pandemic relief efforts – stressed Southern will be the manager and facilitator of the fund with hopes to raise $5 million after it launches. Already, Southern and Pine Bluff-based Simmons First Bank have seeded the fund with $1 million each, raising $2 million to kick-start fundraising efforts. 


The affable Southern CEO said he has already gained support in the nonprofit sector from the Arkansas Community Foundation. He said he has reached out to several for-profit businesses and the local banking community to support the venture fund, which will provide microloans for early stage black-owned businesses, startups and sole proprietors south of I-630 and east of I-30. Further details of the fund will be released later, he said.


“I hope the community will come together to support this fund,” said Williams. “This is capital that is going to be make available mostly to Black and Brown small businesses to really help them get a good footing. Our hope is as these businesses grow and develop …, they can graduate from our fund and go to a traditional bank and access credit and capital.” 


The former statehouse legislator added that the venture fund is in keeping with the principles that former President Clinton and others hoped for when they founded Southern Bancorp. 


‘We were founded with a racial equity lens way back then (in the 1980s). Our founders were visionaries in many ways in recognizing that communities that didn’t have access to capital and investments supported by a community bank or local capital provider are not going to be sustainable and help move families from poverty in the Delta to prosperity,” said Williams.  




1. Arkansas largest CDFI founded in 1986 is seeking to expand its influence, breadth amid the COVID-19 pandemic. (Photo credit by Southern Bancorp) 


2. Southern Bancorp CEO Darrin Williams looks to expand the fast-growing CDFI’s footprint beyond the Arkansas and Mississippi Delta region. (Photo by Marlon Willis)



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