Featured Guest: Darrin Williams
Darrin Williams is a banker, securities and consumer protection attorney, former legislator and passionate advocate for financial inclusion. Currently serving as the CEO of Southern Bancorp, Inc., Williams oversees the strategic direction and operations of each of Southern Bancorp’s three Community Development Financial Institutions: Southern Bancorp, Inc., a bank holding company; Southern Bancorp Bank, one of America’s largest rural development banks; and Southern Bancorp Community Partners, a 501(c)(3) development finance and lending organization – collectively known as “Southern.’ With $1.9 billion in assets, more than 65,000 customers and 52 locations, Southern Bancorp’s markets extend throughout the Mid-South. Focused on the net worth building strategies of homeownership, entrepreneurship and saving, Southern Bancorp believes that wealth building isn’t just for the wealthy; they seek to be wealth builders for everyone. Williams received his Bachelor of Arts degree from Hendrix College, in Conway, Ark., his Juris Doctor from Vanderbilt University School of Law, in Nashville, Tenn., and his Master of Laws degree in Securities and Financial Regulation from Georgetown University Law Center in Washington, D.C.
David Reiling is an innovative social entrepreneur focused on empowering individuals through community banking and financial technology. David is the Chief Executive Officer of Sunrise Banks and has been in the community development banking industry for more than 25 years.
Darrin Williams: [00:00:00] What I’m really wondering is this a moment or a movement? And I really hope that this is a movement where the country is really going to come to grips with its checkered past and really work to provide, you know, broad-based prosperity for everyone.
David Reiling: [00:00:16] Welcome to the NextGen Banker podcast, where we explore what’s next in banking and talk with the innovators responsible for creating positive change in the financial sector. I am your host, David Reiling, and I am very excited to welcome Darrin Williams as our guest today. Darrin, thank you for being on the NextGen Banker podcast.
Darrin Williams: [00:00:34] Hey David, thanks for having us, really appreciate the opportunity.
David Reiling: [00:00:36] Well, we’re going to kick off today, Darrin, with just a little bit of your background and bio for our global audience, give them a little flavor of what you’ve done and maybe where you’re headed. And then we’ll dive into some fun questions today.
So Darrin is the CEO of Southern Bancorp, which comprises three entities: the bank holding company, Southern Bancorp, Southern Bancorp bank, and Southern Bancorp Community Partners, a nonprofit loan fund, all of which are CDFIs, community development financial institutions certified by the U. S. Treasury.
Darrin was recently appointed by President Joe Biden to the board that advises the U.S. Treasury’s Community Development Financial Institutions Fund, or the CDFI fund. Darrin serves on the board of Southern Bancorp Bank and Southern Bancorp Community Partners, as well as the Little Rock chapter of the Federal Reserve Bank of St. Louis.
Darrin and I also share an honor of being board members of the Global Alliance for Banking on Values. Darren previously worked as an attorney in Little Rock before joining Southern. He has also served three terms in the Arkansas House of Representatives from 2008 to 2013. So Darrin, a great background for everything that we want to talk about today, but let’s get started maybe with some of the basics and for our audience to get acquainted with Southern and all its components. Tell us a little bit about Southern and its three entities and what makes it different.
Darrin Williams: [00:01:55] Well, thanks, David. So you you’ve kind of summed up. We are three entities. We say three entities with one mission. We are all, again, all three CDFIs. The bank holding company kind of serves as the governing vision for the entire organization. And as a, as a CDFI, of course, our, our folks who are serving underserved people in communities, and we were started back in the mid 1980s, actually modeled after probably the first development bank in the country, South Shore Bank on the south side of Chicago.
Economically depressed, largely African American community that had suffered from a lack of investment from redlining. And at the time Arkansas’ governor was Bill Clinton and he was looking for ways to stimulate activity in Arkansas’ Delta region, kind of the Eastern part of Arkansas, which has some of the most fertile and most rich land, and where cotton was key and honestly dating back to slavery when, you know, when cotton was king. You know African American slaves bringing in slave that area was booming from economic activity. As slavery ended as the farm mechanized and as one combine could do the work of a hundred men, there was just not a lot of economic investment in that community, those who could get out left, and that area continues to suffer.
And even today is one of the most persistently poor community United States. Governor Clinton said, what can we do to create economic activity in that community, really focused on serving those who’ve been underserved, have been left behind, particularly the African American community there. So he invited folks from Chicago to Arkansas and what was started was Southern Development Bank Corporation, today Southern Bank Corp.
And we were started with the help of the Winthrop Rockefeller Foundation, a charitable foundation here. One of John D. Rockefeller’s sons, Winthrop Rockefeller, was governor of Arkansas. The Walton family, Sam and Helen Walton, had passion for the Delta. Their foundation got involved. And so it was about 10 to $12 million they cobbled together and started this organization. Today we’re proud to be almost 2 billion in assets, serving 50, 51 locations now sort of not just the Arkansas side of the Delta, but also the Mississippi side as well. And we have again those three entities, uh, the holding company, the bank and the not-for-profit loan fund.
What’s really unique about us really is that combination of the three entities and that not- for -profit loan fund really provides for really high touch financial development services and counseling, for folks who need it. And so our big, hairy, audacious goal or our mission, really, is all around wealth building and happy to talk more about that.
David Reiling: [00:04:05] Fantastic. And Darrin as we talk about it, the uniqueness of it, that combination, bankers often don’t think about, particularly when I think of you have a loan fund and a bank, a regulated bank, and I’m assuming places where a regulated institution can’t land or go. You find ways to do that with your CDFI loan fund, the Community Partners. Is that right?
Darrin Williams: [00:04:28] Absolutely right, David. You know, what I say is, the loan fund and the bank, that powerful combination, just gives us more tools, more arrows in our quiver. And so there are many times where the loan fund takes the lead and can actually do a loan that a regulated entity can’t do, as you say, but what’s really powerful, David, sometimes we partner together and make the loan possible because the loan fund, again, being, I shouldn’t say not regulated but at least less regulated, and we’re able to provide more flexible terms. We’re able to customize loans even more so than a community bank where we, we do a fair amount of customization to, for our borrowers.
And let me give an example of what that could look like. And this often happens in serving underserved community and sort of people who have limited access to capital and may not have the type of financial wherewithal to be completely underwritten in all of their needs. So it might be a small business is looking to purchase a piece of real estate and add onto their business.
And so the loan fund, I’m sorry, the bank, might make that loan and the real estate might help support that loan and underwriting. That might make it work, but that small business owner might also need additional working capital in this new location to really expand that business. Well, that debt to income ratio may be a little tough for regulated banks as we just financed that commercial real estate for that person.
And so the loan fund might come in and help that small business owner by providing working capital with more flexible terms, might be interest only for a while, you know, might give them greater flexibility on amortization. And so that’s a powerful combination. It really makes deals work sometime for us.
That’s just one example. And what I’m really proud of, David, is our loan fund. While it is associated with Southern, we can work with any bank. And so we have banking partners where we want that same type of activity for them to be able to use a loan from that way as well. In addition to the, you know, I often say wealthy people have wealth advisors, low wealth people often need wealth advisors, right?
And so we have credit counselors and homebuyer counselors that are HUD certified that work with borrowers, get them ready for a mortgage loan. And that’s the nonprofit. They do that every day, pairing borrowers, to become better borrowers. So they really helped me to build a pipeline for the bank as well.
David Reiling: [00:06:25] Yeah that is just fantastic, Darrin, and a couple of things that you brought out there, particularly when I think of CDFIs, that really Southern is a great, if not the, example, is that the customization and tailoring the need to the communities that you’re serving, whether they’re, whether they’re very rural or urban, and doing so in a collaborative way. Now you do it within your own entities, but then I didn’t know, you also did that with, with other banks as well. And again, that everybody needs a wealth advisor to a certain extent, whether you have a lot of money or a little, it’s important and precious, and maybe just for our audience, I’ll do one quick clarification.
That term CDFI — Community Development Financial Institution. If I had to boil it down in a nutshell, the U. S. Treasury requires, in order to get that certification, that you have a mission, your board of directors actually approves the mission of economic development. And year after year, you have to demonstrate 60% or more of your services are to low and moderate income people, or targeted populations.
And so, a high threshold to meet year in and year out and Southern, I don’t know how many years you’ve been a CDFI. I’m sure over 20.
Darrin Williams: [00:07:27] Yeah so David proudly, Southern was among the first CDFIs ever certified. So just a little bit more on that history of the CDFI Fund. When Bill Clinton, Governor Clinton becomes President Clinton, he takes the model that he’s used at Southern and at Shore Bank, and he says he wants to have a hundred development banks across the country serving, low and moderate income communities, and so Southern really is kind of the model of the DNA for the industry. And so there’s a great public private partnership between the federal government and, and all of our, all the CDFIs out there.
It was that model that President Clinton used when starting the CDFI Fund at the Department of Treasury. So we were among the very first group of CDFIs that were certified.
David Reiling: [00:08:03] Yeah, fantastic. And so in leading the way, and you’re still leading the way, I wanna shift us a little bit to maybe more current time and the initiatives that you’re doing around equity.
And I would say in this particular case, you’re bringing in maybe the third leg of the stool, where we have government and the CDFI Fund. We’ve got a nonprofit in your loan fund. Now it seems like large corporations, large banks and even large fintechs are really engaging with what Southern is doing.
Could you tell us a little bit about maybe your recent history there and, and what you see as the future of that type of collaboration?
Darrin Williams: [00:08:40] Yeah, David, this is, this is an exciting time to be a CDFI as you well know. You know, for 30 plus years, we’re probably the industry’s best kept secret. And now, now everyone’s paying attention to the work of CDFIs and the power and impact that we, that we’re having.
And so really proud to now have corporate America take interest in what the CDFI space is doing. And so we’ve had some really, you know, maybe you call it luck, I’m not sure, but back last year you know, really this country is going through you know, several crises, right? So the global pandemic that has impacted this country and, and particularly impacted low wealth communities, even more so, because many of the folks in those communities are the first responders who really couldn’t choose between working remotely or going to work.
And so they not only have the health benefits, but you also have economic problems from the pandemic that were already exacerbated in these communities. So you’ve got that going on. And then, David, as you guys well know, being there based in Minnesota, the murder of George Floyd really — really brought the racial divide in this country to a boiling point.
And, what I’m really wondering is this a moment or a movement. And I really hope that this is a movement where the country’s really going to come to grip with its checkered past and really work to provide, you know, broad based prosperity for everyone. So it’s really the global pandemic, its disproportionate impact on black and brown people, the murder of George Floyd , and other unarmed black folks.
And I just think that America said this is just too much. And so the philanthropy community, government has always kind of been engaged in this space, but now corporates have stepped up and I’m really proud of corporate stepping up and the business round table, 200 or so of the largest businesses in America, came together with an initiative headed by Doug McMillon, CEO of Wal-Mart.
Where of course we just happened to be based in Arkansas. They are as well, and these major corporations are making significant commitments around advancing racial equity, and what’s really powerful about their plan, David, it really models what Southern has been talking about for 30 plus years. And they really use family financial wealth or building that income for folks and building, you know, building wealth for people as a foundation for helping them thrive, in healthcare and education and workforce, but also financially. And so, many of these corporates, including banks and fintechs, as you said, have decided they want to support CDFIs as well as minority depository institutions.
We have been fortunate as a black led CDFI to be a part of the groups they’ve supported. So we’ve had multimillion-dollar investments from Bank of America, from JP Morgan Chase, and even from Square, just a wonderful FinTech or payments platform, and really excited about those partnerships, excited to have the opportunity to work with them and really looking forward to see what the future might hold for us in that regard. .
David Reiling: [00:11:13] Yeah, I have to admit it is very exciting. And again, I hold the same question of whether it’s a moment or a movement. And I hope, and I keep thinking every day as to what can be possible to solidify this movement and, and think about it in those terms. And in corporate America, coming to the forefront is a big step and sign in regards to, I think that threshold you mentioned of enough is enough.
And as we move forward, it’s going to be very interesting to see how Southern and other CDFIs come together to try to solidify that movement. So maybe in that, in that vein, what do you see? What’s next for Southern? What’s the vision look like?
Darrin Williams: [00:11:53] Well, uh, David, this is a unique time, as I said, for CDFIs and people ask me often what keeps you up at night?
As, as a CEO, that’s the question you get all the time. I’m sure you’ve gotten that as well. And, and what I, what I’ve been answering here lately is opportunity frustration keeps me up right now. There are just so many opportunities and there’s so much need, and we feel so much responsibility to try to serve that need.
That, you know, we’ve just got so much to do. , and again to capture this and solidify this time to become a movement and not just a moment, I just feel like we need, you know, you know, 30 hours in a day and give everybody else 24 to catch up. And so, you know, what’s next for us? We’re excited that we’ve got these new corporate partners.
We’re excited that the federal government, like never before, stepped up to invest in CDFIs with some very, very aggressive, you know, capital friendly programs for an institution like ours. And so we hope to take advantage of those programs and we’re really looking over the next five to seven years, we put a plan together where we want to probably more than double in assets and we don’t use assets because we want to be a bigger bank.
Assets is really a proxy for impact. And so really trying to double down on our impact. And again, our work focuses on, on things that have been proven to build net worth. And so we’re gonna, we’re gonna try to help get more people into houses. We’re going to have to help try to create, retain more businesses and we’ll help empower people to save and accumulate assets because those three things have been proven to build net worth.
And so, you know, what’s next for us? It’s continue to do that work on a larger scale, but we’ve now begun to for the last four or five years, really double down on our innovation and our FinTech and our digital efforts. And so we really believe that, you know, our next bank branch is in everybody’s pocket and their mobile phone.
And so we want to deliver our products and our solutions, via the mobile phone and really scale that across the country.
David Reiling: [00:13:35] That is super fantastic. I love the vision and really the — well assets are one thing. It’s really the impact that’s driving Southern to the next level. And so just a question for you and maybe zoom out a little bit as, as we are both board members of the Global Alliance for Banking on Values.
So if we took a global perspective for just a moment, what have we, what have you learned from the Global Alliance for Banking on Values as to how it might be applicable to Southern’s Mission?
Darrin Williams: Well, David, I’ll tell you what I am so happy that this organization joined the Global Alliance for Banking on Values and, and GABV has really opened my eyes up to what is possible in the banking sector.
In many ways our international colleagues are way ahead of the global bank- I mean, the U. S. banking system, and from a digital standpoint, they’re way ahead, you know, some emerging companies have kind of bypassed plastic and they’re utilizing the mobile device in ways that are powerful and really delivering impact for people.
And that’s accessible to people. But I’ll tell you one area where Southern is beginning to focus more of its attention on and I credit GABV for helping us get there is that we have clearly always been a double bottom line company. And we’re beginning to think more and more about being really that triple bottom line company.
If we don’t protect the planet that we live on then what are we doing? Right? And so it’s, it is a precious resource we have to protect. And so we’re beginning to think more and more about our impact on the environment. I love what GABV says: we want to finance change we want to see in America — in the world.
And, so from our standpoint, there’s a strong correlation between unhealthy poor communities and environmental hazards, right. And environmental issues. And so, unfortunately many of the places that we serve are some of the most unfriendly environmental places. I heard a stat the other day from, I can’t remember the person’s name, a professional in the healthcare space talking about the combination or the correlation between finance and health.
And she says that the neighborhoods that were redlined in the 1930s, those neighborhoods are significantly hotter than the neighborhoods that were not redlined. And so there’s a strong correlation between where we invest our money at that time and what we invest in. And in the planet. And so we are beginning to take a deep look at our own carbon footprint, and we have a goal to reduce our own carbon footprint starting, you know, before we start pointing the finger at our customers, we want to point it inward and say, what are we doing?
And so we’re trying to really work to reduce our own carbon footprint. We have a plan that we put together around doing that. And then we want to take that to how we measure our impact on the carbon of our loan portfolio. And then how can we finance those things that are better for the environment?
How can we kind of encourage our own customers to do that as well?
David Reiling: [00:16:13] Yeah, fantastic. From the double to the triple and, and again, hitting all three legs of the stool, but in this particular case, in terms of prosperity, social, as well as environmental. So Darrin, I’m gonna switch your gear here a little bit, and I want to focus a little bit on maybe your past experience, previous experience in law and politics.
And so if you had to think about your career path and how you got to where you are today at Southern — how has the background of law and politics helped you move not only Southern, but the banking industry forward?
Darrin Williams: [00:16:45] Well, yeah, that’s, that’s an interesting question. I tell people often I’ve gone from suing banks to running a bank, right?
Really, my law practice was around securities class action litigation and consumer litigation for big corporations who were in, in our eyes, were providing unconscionable business practices or violating securities laws. And oftentimes had to sue large banks for those practices. And now I have the pleasure of running a bank, I think differently about those lawsuits, maybe.
But I’d say the legal training is such a powerful tool. And, I’m one of those folks who enjoyed law school so much. I went back and got a master’s of law in securities. And so the law is really a foundation of all the we do. And so at Southern, we just happened to be blessed with maybe, maybe not blessed — we have so many attorneys. The president of our bank is a lawyer. The head of our largest region is a lawyer. And, I think that training the legal training and being able to see your trained as a lawyer to see all sides of an argument, and can approach things with a holistic view.
And I think that’s important and has been important in banking. From a legislative standpoint, from a policy politics standpoint. In my time in government, as an elected official, it’s really all about people and particularly community bank and what we do, it’s all about relationships and to be a successful legislator, you’ve got to build the relationships necessary to really accomplish those tasks.
And so I think the skills necessary to be a successful legislator, to bring people together, to hear them and listen to them and to really create solutions that matter have all been powerful and helpful to me and running Southern Bancorp. Because really what we’re trying to do, we’re trying to provide financial and economic development solutions for people in communities.
And so we’ve got to first listen to them, right? We’ve got to build relationships necessary to jointly, collectively, find those solutions. And so, my background in both law and politics really has been, you know, I think beneficial. I wish I could say I planned this. I didn’t chart this journey, you know, I’m blessed more than I am good.
And so it’s been a powerful combination and I think it really has been helpful.
David Reiling: [00:18:33] Yeah, fantastic. Certainly shows Darrin in your leadership that’s for sure. And so gonna end with this question with you, in terms of what do you think the next gen banker looks like? At some point in time, you and I will likely fade into the sunset or retire to a board position only.
But when we think of the skills, what’s necessary for the next generation of bankers in order to move positive banking forward
Darrin Williams: [00:18:57] Yeah, that’s a great question. You know, interestingly, just recently I was asked by the Federal Reserve to pen a chapter in a book on rural development. Um, well, I said recently, it was actually last year.
They’re about to publish the book, David and I, interestingly, I was asked to do this right after we get back from Switzerland at the GABV conference. And I guess in 2020. Was it 2020? And I titled this chapter, they’re asking what, you know, what do rural communities need to, to advance, you know, what kind of bankers do we need?
And so I really had titled this chapter, you know, we need Swiss army knives. Because I had spent my time trying to find a great Swiss army knife as souvenir coming back. But what that means is we need someone really, who has a lot of tools and can really specialize in a lot of areas.
Right. And so I think about, I think about, Apple, you know, I think, you know, such a, such a good company. When you walk into an Apple store, you walk in and they greet you and you talk to an Apple Genius — they’re an Apple Genius. Right? And so whether it’s your cell phone, your iPad, your computer, they actually can do quite a bit of work for you right there one-on-one as a customer. So I see the next generation banker being able to serve both your retail needs as well as your lending needs. And also helping you think about how, you and your family progress from a wealth building standpoint. So I see the next banker being, having really a holistic approach and kind of being that Apple Genius or that banking genius.
And so that’s how we’re thinking about it. And so the type of people we’re looking for are people who have really that kind of broad thinking, and are willing to, you know, dig deep into subjects.
David Reiling: [00:20:26] Fantastic. Well, Darrin, as we kind of come to the end, I just want to thank you for taking the time. I think I could chat with you for hours on end and thanks for being on the Next Generation Banker podcast.
We appreciate your leadership in moving banking forward in a positive direction, not only socially, but in the environmental section. Thanks so much for being on the NextGen Banker podcast.
Darrin Williams: [00:20:44] Hey David, thank you. And thanks for all that you guys do at Sunrise Banks.
David Reiling: [00:20:49] For this episode’s musical feature, we’re showcasing Greyson Turner.
Greyson is a singer/songwriter from Spartanburg, South Carolina. He is also a member of the acoustic duo, Grey Ally.
Here is “What Makes Life,” by Greyson Turner.
(Song bit plays)
That was “What Makes Life,” by Greyson Turner. You can find more of Greyson’s music on Apple Music and follow him on Instagram @greyson_turner. If you would like your music featured on the NextGen Banker podcast, email Nextgenbankerpodcast@gmail.com with a link to your music and website.
Thanks for listening to the NextGen Banker podcast. We’ll see you soon.