Cash a check, talk about loans, that’s what you visit a bank for. But at Southern Bancorp, there’s a little more to it.
“Southern Bancorp is a CDFI, and that stands for community development financial institution,” explained Nathan Pittman, Senior VP for Policy and Communications at Southern Bancorp. “And that is a treasury designation for banks, credit unions, loan funds who exist to serve an underserved population.”
A CDFI is different than some of the larger banking institutions.
“I think it really comes down to one word, intentionality. CFDIs are very intentional about their work. We specifically go out to serve an underserved population. For us, it’s rural America,” he said.
That’s where credit counselors like Charlestien Harris come in.
“I had a lot of people to help me get back on my feet, so I promised the Lord when I got back on my feet, I would reach back and help other people and that’s why I'm so passionate about what I do, because I've been to the bottom,” said Harris, Credit Counselor at Southern Bancorp.
Instead of turning someone away for a low credit score for example, Harris works with customers to get them where they want to be.
“We do around 7,000 loans a year and a little over half of those are for less than $10,000,” Pittman said.
Rural communities have slowly been forgotten by banks as brick and mortar locations close their doors at record rates.
“In this country, we have seen a drastic reduction in the number of bank branches over the years and the pandemic over exacerbated that,” Pittman said.
It’s an issue the National Community Reinvestment Coalition has been tracking for years.
“Between 2012 and 2018, we saw a 31% decline in small banks, and an almost 12% decline in intermediate banks,” said Jesse Van Tol, CEO of the National Community Reinvestment Coalition. “These are the kinds of community banks that you see present in rural communities and low income communities.”
A study done by the coalition shows more than 13,000 bank branches closed in the U.S. between 2008 and 2020. That’s nearly 14% of all branches.
“We see a particular impact on small business lending, a lot of small business lending is relationship banking. It’s still done face to face,” Van Tol said.
Foe Kinchen O’Keefe, having banks physically in his community is important.
“In Clarksdale, Mississippi, we need that human relationship, that person to person. A lot of the times, those bank tellers are the first person to see a need for their customers,” he explained.
O’Keefe has lived there all his life, and now fills the role as the director of tourism for the area. But in his lifetime, he’s played a big role in revitalizing this town, where banks have given him what he’s needed to bring places back to life.
“Banking kept this town downtown from dying. It was dying. It was right there at death's door,” he said. “Banking now is nothing like it was when I was growing up. I thas totally changed. It is a totally different industry.”
Now, there’s also a heavy reliance on technology, which isn’t always an option for those in rural areas.
“A lot of people don’t have access to phones. A lot of people who might have access to phones don't know what an app is. It’s challenging for most people out there to get through the process,” O’Keefe said.
“For the younger person, they can do an app and the first thing you’ll get from the average person is what is an app,” Harris said.
The lack of physical presence by banks has also left the market open for payday lenders in the area.
“When someone is using a payday lender, they are paying so much more in fees and interest than they would at a traditional financial institution,” Pittman said.
A handful of storefronts exist in a mile radius of Southern Bancorp’s physical location in Clarksdale, Mississippi.
“You’re not gonna see a lot of payday lending stores on the wealthy side of town and I think that tells a lot about who they are focused on,” Pittman said.
Southern Bancorp is growing their presence in more rural communities to fill a void left by other banks, and provide support for those who need it.
“Our hope is that with all the attention that's been brought to CDFIs during the pandemic, more people will look for a CDFI, see how they can engage with them, see about the products and services they offer, and see if they can help them on their own wealth building journey,” Pittman said.