Southern Bancorp CEO: Average Home Prices Ticking Up

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00:00Darren Williams joins us right now. He's the CEO of Southern Bancorp, an Arkansas-based lender with

00:04about $5 billion in assets. It's also one of the oldest and largest community development

00:09financial institutions. And I bring that up because CDFIs have always been instrumental

00:15in helping lower and middle income people actually get mortgages and buy homes. Do you see a role

00:24going forward, whatever these policies are going to be out of Washington,

00:27for Southern and your peers to do that, help with that? Well, first of all, Romain, thanks for

00:31having us on. Absolutely. There's a role for CDFIs. 60% of our work must focus on serving low and

00:37moderate income communities. At Southern, we really have three verticals that we work in.

00:41And these are verticals that have been proven to build wealth for families. The very first one

00:44is homeownership. And so about three years ago, we started our own secondary mortgage business.

00:49And we hired a gentleman named Jeremy Davis, who's a fantastic lender and leader. And this year,

00:55we put about 500 families in homes who otherwise would not be able to buy a home. These are first-time

01:03homeowners. Our average home probably is about $275,000, $280,000. So we're talking about a

01:09small home in the southern part of the United States. But I can tell you what he talks about,

01:14the biggest deterrent for families is affordability. And it's often the down payment. So we've created a

01:20number of down payment assistance to programs to assist families access homeownership.

01:26Really interesting point when it comes to the down payment. Certainly, you have to imagine that's

01:29one of the biggest purchases any average person will make in their lifetime. But when it comes to

01:34the mortgage piece, we've been watching mortgage rates tick down a little bit over the past year or so.

01:40When you see mortgage rates come down a little bit as the Fed reduces interest rates,

01:45what trends have you seen in terms of how that translates to people applying for mortgages?

01:51Yes. So anytime you see a downward tick in the interest rates, that's helpful in the mortgage

01:57business. But it's got to be that long-term, the 30-year, right? So right now, we've seen the

02:01short-term rates come down. You've not seen the curve bend on the long-term rates. And so that's what

02:06you really have to see to see a real impact in increased mortgages.

02:11Give me a sense of what the housing market actually looks like in the areas that you operate. I mean,

02:15you're primarily down South Arkansas, Missouri, Mississippi, Oklahoma. I'm probably forgetting

02:19a couple other states. What is it like there? Because when we talk about these institutional

02:23investors, and every time we ask them where they're buying, it's always the states I just

02:27mentioned, the Sun Belt. I mean, that seems to be the core areas.

02:30Yeah. So our markets are pretty diverse. So we're in some very, very small rural markets. We're also in

02:35some larger metro markets. So 75% of our bank branches sit in counties with less than 20,000

02:41people. And so in those markets, it's really about housing stock. People are not moving there

02:49to build homes. And so the housing stock is an issue. In some of those more populated communities

02:55in Texas, in Little Rock, and in other areas where we have a little more population, you're seeing

03:00that average home price tick way up outside of reach affordability for people. And it is a challenge.

03:05And Dan, we have only about a minute left with you. I want to talk about your recent acquisition

03:08of Legacy Bank that just closed this week. That brings your total assets to nearly $5 billion.

03:14Why this combination? And why now?

03:17Yeah, it's exciting for us. So Legacy Bank and Trust, outstanding group of people. They are also a CDFI.

03:23It's the first time we've actually had a CDFI buy a CDFI for us to buy another bank that was a CDFI.

03:27Their team and their tools and our talent combined is going to be powerful. It puts us in five

03:33states. It gives us an affordable housing practice, a light tech business that has completed business

03:39deals in 35 states. Combine that with our mortgage companies operating in about eight or nine states.

03:44We think this is a powerful combination really to support LMI communities and families that need

03:48the type of bank and brand of banking that we provide.

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