Southern Bancorp Extends Counseling and Credit Products and Services to Rural Consumers

In a Nutshell: Southern Bancorp fosters economic opportunity and upward mobility in communities in rural Arkansas and Mississippi. The institution provides loans to customers underserved by other banks and offers grants to assist small businesses in times of financial need. Southern Bancorp also emphasizes financial education through targeted instruction and online resources. The institution provides counseling services that focus on credit, homebuying, and business needs. Through its initiatives and programs, Southern Bancorp seeks to empower rural customers and those in underbanked urban areas.

Many people are eager to buy a home early in life, even though it involves taking on significant debt. That’s because homeownership can help them save money in the long run by building equity in a property — compared to simply paying rent. Once consumers pay off a mortgage, they own a valuable asset outright and can leverage it should the need arise.

However, some people want to buy a home for reasons beyond helping their own financial situations. Take, for example, one long-time customer of Southern Bancorp. For many years, she’d trusted the institution to prepare her taxes for her. One day, she said she was ready to buy a home — at the age of 63.

Unfortunately, her first attempt didn’t work out, but thanks to the support she received at Southern Bancorp, she is now a proud homeowner. That decision has changed her life, and the lives of her family members, for the better.

“It changed her trajectory, not just for her, but also for the grandchildren she’s raising and for her children who may have never seen homeownership as a possibility,” said Dr. Karama Neal, President of Southern Bancorp Community Partners. “They now see that as a possibility because they saw what their grandmother did, what their mother did, and that opens it up for them.”

Southern Bancorp has 49 locations serving many rural areas of Arkansas and Mississippi. In many of its locations, the Southern Bancorp office is one of the only — if not the only — financial institution in town.

“Those are very intentional locations,” Neal said. “We’re there to serve places that are economically underserved.”

Southern Bancorp has three separate entities: the bank itself, a bank holding company, and a nonprofit loan fund. Those three arms have one unified mission to promote economic opportunity and mobility in Southern Bancorp’s service areas.

“The key driver is net worth. Do you have money, assets, or resources you can rely upon to take advantage of an opportunity or to meet an emergency need?” Neal asked. “The key drivers to net worth are things like savings, homeownership, business development, and good jobs. Net worth is the driver of economic mobility, and that was why we were founded.”

Policies Ensure Accessibility for All Borrowers

Southern Bancorp wants to ensure unbanked and underbanked consumers have access to financial services at a reasonable price. The financial institution also wants to meet these consumers where they are, so they avoid bureaucratic challenges.

“We want to make loans to people who might not have access to credit someplace else,” Neal said.

For example, a customer in need of a loan may be willing and able to repay the debt promptly. However, if they went through bankruptcy less than four years ago, they may not find a bank willing to loan them money.

“They’re a perfect customer for us, in terms of lending,” Neal said.

Southern Bancorp’s commitment goes beyond standard loans. It also partners with other institutions to ensure more people can access the funds they need. For example, if someone applies for a $500,000 loan with a bank, but that bank can only extend $300,000, Southern Bancorp may make up the $200,000 difference.

“Everybody’s happy, and the person gets access to credit in a way they might not have otherwise,” Neal said.

As part of its mission, Southern Bancorp issued loans under the Paycheck Protection Program, a resource for businesses affected by the COVID-19 pandemic in 2020. The loans it disbursed ranged from $200 to $4 million. Its PPP involvement also spawned Southern Bancorp’s Business Continuity Grant Program.

“We wanted to meet people where they were. We recognized businesses did not have access to the Paycheck Protection Program. They weren’t eligible because they were too new and didn’t have the proper documentation,” Neal said. “For one reason or another, they were not eligible for the program, the $200 or the $4 million version. We raised money for what we call a business continuity grant to help those businesses thrive, or at least survive, this period.”

Financial Education Can Help Consumers Manage Money

According to Neal, Southern Bancorp believes that money is so much more than legal tender used for all debts both public and private.

“If that’s all it was, you’d just tell people to save more and spend less, and then we’d have it solved,” he told us. “But it’s so wrapped up in our emotions and how we value ourselves, and how we think other people value us, that it’s so much more than ‘save more and spend less.’”

Southern Bancorp hosts an online financial education resource center to address such complex issues. It divides the materials by topic and age group to provide targeted information when it’s most relevant to consumers. The resources are delivered in a way that aims to change behavior, not just offer passive information that consumers may not use.

For example, Southern Bancorp can teach someone about homebuying, but until they’re in a position to buy a home, that information may be irrelevant to them. Southern Bancorp trains its employees to deliver that information or direct customers to it, as needed.

“Everybody at Southern — all 400 employees regardless of their title, location, or entity they work in — all of us have goals around providing services to the public around this,” Neal said. “We encourage folks to teach classes on these topics, or, at the very least, direct people to the information so they can teach the classes. If someone comes in and says, ‘I’ve got to teach my fifth-grade Girl Scout troop about money. Can you help me?’ Even if that employee can’t help them, they can direct them to the resources we’ve collected.”

Counseling Services Offer Targeted Guidance and Support

One of the most critical components of financial education is understanding credit. Personal credit affects many aspects of life, including buying a car, purchasing a home, or even getting a job in specific sectors. As such, knowledge of credit is a powerful tool for building financial wellness and upward mobility.

In keeping with its mission, Southern Bancorp’s credit counseling emphasizes building and rebuilding scores.

The service helps customers understand their scores and credit histories, and encourages better credit management by offering a free annual review. Southern Bancorp also helps consumers correct errors and omissions on their reports, and it teaches best practices for paying down debt and bills, which can boost scores and creditworthiness.

And credit ties into Southern Bancorp’s other counseling services as well. Consumers can take advantage of homebuying counseling, which covers money management, mortgages, best practices when shopping for a home, securing a loan, and managing finances after a purchase.

Southern Bancorp’s business counseling service offers insight into credit evaluation, money management, and startup and entrepreneurship training. The service aims to make small business owners more likely to receive funding when they need it.

“We do financial development services where we help people increase their access to financial services,” Neal said. “That includes things like credit counseling, housing counseling, homebuyer education, financial education, free tax preparation, and matched savings accounts. A variety of those things that help people prepare for banking in any institution.”

Southern Bancorp: Expanding Access to Capital in Underserved Communities

“The place where I grew up when I was a little girl and lived until I was about 8 — that section of Little Rock, Arkansas, has not had a bank in ages,” Neal said.

That lack of banking opportunities makes it difficult for people to access products, services, and fair rates they need. Southern Bancorp is dedicated to extending opportunities into these areas and ensuring consumers don’t fall victim to predatory practices because they have nowhere else to turn.

As part of its policy work, Southern Bancorp campaigned to enforce existing usury law in Arkansas. Thanks to its efforts, predatory payday lenders were forced out of storefront locations throughout the state, ensuring people had access to small-dollar loans at affordable rates with institutions that put the community good before their own profit.

“It’s important for all of us to be thoughtful about who we do business with — whether it’s us or another organization. You should choose an organization that aligns with, and is helping serve, your needs and the needs of your neighbors in a way that is not just driven by profit,” Neal said. “I would say the bank is primarily mission-driven, and the profit is there to drive the mission.”

Southern Bancorp addresses those issues and continues to pursue its mission in rural areas. Those shortcomings are prevalent in urban areas as well, and Southern Bancorp is aware of those pressing needs.

“We ask, ‘Where is there a lack of access to capital? Where can we help that?’” Neal said. “We were founded around that rural focus, but we recognize that it’s much broader. As we move forward, we’re very intentional about financing urban areas as well.”