CEO Stories: Wealth-Building Isn’t Just for the Wealthy

This Is Capitalism: Darrin Williams

RH: This is Capitalism. I’m Ray Hoffman. Darrin Williams practices capitalism in places where capitalism is sorely needed, some of the poorest towns and neighborhoods of Arkansas and Mississippi, particularly in the Mississippi Delta, because Darrin Williams left a promising career in the law and politics to be the CEO of Little Rock-based Southern Bancorp, a bank on a mission, it proclaims on its website, a mission to create economic opportunity.

To learn about Darrin Williams it may be best to go back about three decades. Let’s begin with the fact that you were student body president at Little Rock Central High School. Governor Bill Clinton had named you to a school advisory board so obviously you were a student of some promise. But if I had walked up to you at that time and said you were going to be CEO of a bank, what do you think your reply would’ve been?

DW: Wow. My reply probably would be “not me.” That was not my intention back in high school. I probably knew early on, or at least I thought I knew early on, even if I didn’t know exactly what that meant, that I was going to be a lawyer. And that’s actually what I did initially. But that was probably my focus back then.

RH: What attracted you to the law?
DW: I didn’t have a lot of lawyers in my family. I didn’t have any lawyers in my family, as a matter of fact. It was really my interest in politics and law that pushed me that way. As an infant, I was adopted as an infant. My parents are much older than my friend’s parents. My dad was 55 years old and adopted a 2-week-old child and my mom was in her late 40s when they adopted an infant. And our lawyer, who is now deceased, both my parents are deceased as well, who handled that was probably the only lawyer that I knew as a teenager. But for whatever reason, I was fascinated with the law and interested in being a lawyer and that was kind of my driving ambition.

RH: So if in 2014, when you were president pro tempore of the Arkansas House of Representatives if I’d come up to you and said you’re about to become CEO of a bank, what would you have said then?
DW: Well, you know, so my law career really morphed from not…to really suing banks and publicly traded companies, to be quite honest. I was a securities litigation attorney representing on the plaintiffs side and it’s usually investors in stock fraud cases and also consumers in class action consumer litigation and had the opportunity to represent consumers who had been defrauded, or at least our allegation they had been defrauded by various types of businesses.

So back during my practice, since I had the occasion to be in a law suit against some banks and publicly traded companies, I probably would not have guessed that I would be running a bank or a financial institution but it has turned out to be just a wonderful opportunity for me.

RH: So your impression then of banks and financial institutions has changed somewhat over the past several years?
DW: Well, somewhat. I will say that there are unfortunately some businesses and banks that may not take full respect of the consumer as I would suggest that Southern does. Southern, we are a community development financial institution, Southern Bancorp, and as such our focus is really on serving under served communities.

So we were founded and intentionally work to serve those who sometimes don’t have traditional access to capital and credit and the financial development services. So we really try to lift both the communities and individuals and build their net worth.

RH: So that does tie back in a sense, although not in a specific sense, that does tie back to what you were probably aiming for in that early career in the law.
DW: Probably so. I was very much focused on being of service. Again, having the parents that I had, my dad was a minister, my mom a schoolteacher, and I saw them being great examples of service. They were always giving back always doing things to help folks in the community and so that spirit of community service, of helping others, had always been instilled in me, probably why I kind of focused more on the plaintiff’s consumer side of the law. That was my interest in being in the legislature, being an elected official, how I could serve.

So this opportunity now to lead Southern Bancorp really fulfills the combination of my interest in law, politics, business, as well as in serving and helping others. So there’s probably a nice tie there together though I probably couldn’t have thought about that or recognized that or planned for that if I had tried.

RH: I want to go back to something. It just crossed my mind, every time I’ve met the children of older parents they were always so much better behaved.
DW: Yeah.

RH: They’re a little more polite, they’re a little more worldly at an earlier age from being around older parents. Was that the case with you and did that help you in terms of moving forward to be class president at Little Rock Central?
DW: Well maybe so. I hadn’t thought about that but truly my experience growing up was I had a wonderful childhood. I hit the parent lottery. Being adopted by Warren and Katherine Williams was so influential in my life, watching them. And their peers, as I grew up, were obviously much older, older than most of my friend’s grandparents. So most of my family’s peers or even relatives most often were older and at that time, you were expected to say “yes ma’am, no ma’am, thank you,” be very polite. And so that was just kind of how you were raised. And so maybe that discipline, that traditional upbringing, obviously had a positive impact.

RH: Yeah, it just crossed my mind about that. Now for Mark Pryor, who was elected in 1998, you were chief of staff.
DW: And that was a wonderful experience being a young attorney and then having an opportunity to lead the AG’s office, a group of very dedicated public servants who really cared about their clients. I got a chance to really witness and watch how you practice law from a client-focused perspective. And the State Attorney General’s office touches so many aspects of the law that it gave me a well-rounded legal education. From civil to criminal, it is one of the largest law offices in the state of Arkansas.

RH: And I’m thinking also that that must have been terrific preparation for being a CEO.
DW: It was good preparation. We had a significant budget, several not just attorneys but paralegals and other professionals that worked there. A large office, we had to answer to the state legislature from a budgetary standpoint, had to answer to the state of Arkansas, our clients, from a customer standpoint. There was a lot of training and a lot of learning that actually benefits me today.

RH: What was it that turned you from being an up and coming lawyer and state legislator, the president pro tempore of the Arkansas House to being CEO of Southern Bancorp?
DW: I really did not know much about Southern Bancorp Bank or the holding company until about 2012 when we first started talking about me joining this organization.

RH: And you turned it down, the CEO job the first time, right?
DW: [Laughs.] I did turn it down the first time. I was completely happy practicing law, I thoroughly enjoyed my practice. We had a nationwide practice, most of my cases were in the federal courts throughout the country and I really enjoyed it. And though I had a great impression of Southern, I really wanted to find a way to help but I just was not necessarily ready to leave my law practice. So I turned the job down but I did ask how can I help and they invited me to join the holding company board of directors. So I became a board member and then began to initiate the search for the next CEO of the organization. Little did I know six months later that it actually would be me.

RH: Now you didn’t lead the search committee, like Dick Cheney did?
DW: [Laughs.] I did not. I did not lead the committee to find myself. No, no. It was my wife who helped me come to that conclusion. As a deacon at my church, I led a financial principles class where we worked to help people understand money, how to use money, how to be a good steward of their money really from a biblical standpoint.

It was my experience and my wife’s experience, we co-led that with another couple. And my experience through that really led me to see that there were so many people unnecessarily struggling financially because they just didn’t have the skills and resources and never were properly taught about how to use money effectively and how to be a good steward. And so through this program and this course, it was about a 13-week course, people were having significant improvements in their financial lives.

And at some point in time, I think I said to my wife, this is really rewarding for me, if I could do what I wanted to do, maybe this is what I would do full time, I would take this on. And I didn’t really think much about that anymore until this job came about and I turned it down. And she said to me, well you may have just turned down a job that you told me you wanted some time ago. Maybe this is God’s way of giving you your wish because this bank really does exactly that, it helps people understand how to use money and be good stewards.

And I just hadn’t thought about it that way and it was her really bringing that back in my memory that made me start thinking about this opportunity again. And after talking with her, we decided that we would take the position and I haven’t looked back. I’m so happy that we did that.

RH: What are the operating parameters around a community development financial institution?
DW: It was really Southern and a bank called Shore Bank in Chicago that’s really the blueprint for the CDFI industry, or at least the CDFI movement. And at Treasury, when Governor Bill Clinton became President Clinton his experience with Southern and with Shore Bank, which Southern was modeled after because Bill Clinton saw Shore Bank operating in Chicago, when he got to be president he wanted to have these financial institutions that were designed to work in hard to serve communities, low- to moderate-income census tracks, he wanted to have these institutions around the country. And so he created the CDFI Fund at the Department of Treasury.

And as a CDFI, we have to commit to doing 60 percent of our activity in low- to moderate-income census tracks. Southern’s focus is on primarily rural communities in the mid-south. We are in some more highly populated areas, but if we were in more of an urban area, we’re often in the communities that are under served, places where other banks either are not there or very few are there and then often times they may have been there but they’ve now left because those communities have declined. So we, as a CDFI, are required by our certification to operate in those areas where other banks choose not to go.

RH: And Southern Bancorp strikes me then as an almost textbook example of capitalism on a really micro-economic level.
DW: That’s exactly right. The root word of capitalism is capital. And unfortunately in some places access to capital is almost nonexistent. So in about sixteen of the markets that we serve we are the only financial institution there, or one of only two financial institutions there. So those communities don’t have traditional access to capital and credit.

And it’s been shown in a number of studies that the further a business moves away from traditional sources of capital and credit, the more they pay for that capital and credit and often times they don’t even access it. So it’s harmful to the business because they end up paying more for that capital and credit or those relationships with that financial institution are not strong enough to really support that business.

RH: So this means you have expanded into towns where if there had been a bank it was long ago. Can you take me into one of those towns and go through what you and the bank do to become a responsible center of the community?

DW: Sure. Happy to do that, Ray. There are a number of towns again where we are either the only financial institution or one of just a few. And probably those, where we are one of just a few, probably more success stories than where we’re the only one. In some communities truly we are providing simply a service of cashing checks, places to deposit checks, very transactional, not a lot of lending activity. That’s not the ideal place for us.

I’ll give you an example of Helena, Arkansas. Phillips County, a county of probably 18,000 people. There are now only two banks left in that town. There used to be many more. And we make a significant number of loans from large agriculture, row crop loans to very, very small, low-dollar consumer loans. And I mean as small as $500 sometimes.

But we are truly engaged in that community and all aspects of the community from financial education courses in our banks or with community partners at churches and community organizations throughout the town, all the way to sponsoring all the things you think a bank typically sponsors from a local Boys & Girls Club. We have even worked to help bring in one of the KIPP Schools, public charter schools, into Phillips County.

The school system was struggling, that school now is having tremendous success and has grown outside of Phillips County into two other counties in the state of Arkansas, graduating students, sending them to college and getting them through college. And so Southern was a part of all of that.

RH: And you have ramped up many of these activities over just the last three or four years.
DW: That’s correct. So we are very much in a growth mode. So what is happening in banking in general, there is just a mass consolidation of banks. Twenty years ago there were over 20,000 banks in the country. Today there are less than 7,000. And that consolidation is having a disproportionate impact on rural and under served communities. So as banks shrink, as large banks buy smaller banks, many of those branches are disappearing in rural communities, many are disappearing in low wealth communities.

And so it’s our focus to grow and expand in those communities where we know capital is needed and allow capitalism to really work for everyone.

So in every one of our Southern Bancorp locations we have what we call opportunity centers. And our opportunity centers are there really to meet the customers where they are. And we have very basic services that we provide and we will sit down with customers and help them understand, one, their credit report. So many times people don’t understand their credit report and how to really work to build a stronger credit score.

We also have some very skilled credit counselors that work throughout our markets. They will sit down one on one with our customers and help them build a plan to repair and restore their credit. You don’t even have to be a Southern customer to do this. This is a free service that we provide for anyone who walks in the door and who is willing to help themselves.

We also for the last 13 years now, we have provided free tax preparation services. And so this year we have already done over 3,000 tax returns. And what we really focus on for low-wealth people who qualify for the earned income tax credit, we make sure one, they know about it and two, they apply for it. And over those 13 years, we have been responsible to bring over $40 million back into the market that we serve. When those dollars come back into the market that we serve they are turned over to repair homes, to buy products and services and it helps stimulate the economy.

RH: And this ties into a quote I’ve seen of yours and I’m surprised I haven’t heard you say it yet–wealth building isn’t just for the wealthy.

DW: That’s exactly right. We say that because we believe that we consider ourselves wealth builders for everyone. It’s very common for high net worth individuals to have wealth advisors. What’s not as common is for low-wealth individuals to have wealth advisors. But who needs it more?

RH: Now you understand about Southern Bancorp being a bank on a mission.

This is Capitalism. I’m Ray Hoffman.