Business Case Studies & Business Publications

Southern Bancorp, Inc.: Reviving the Rur...

Fairchild, Gregory...

Case

Southern Bancorp, Inc.: Reviving the Rural Economy through Financial Products and Community Involvement

Fairchild, Gregory B.; Glinska, Gosia

ENT-0203 | Published June 18, 2014 | 18 pages Case

Collection: Darden School of Business

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The case features Southern Bancorp, Inc. ("Southern"), a family of community development financial institutions (CDFIs) consisting of Southern Bancorp Bank, one of the largest and most profitable community development banks in the United States, and Southern Bancorp Community Partners, a nonprofit affiliate. Although the bank was expected to be profitable, the entire organization put community, not the financial interests of its shareholders, first; therefore, it was driven by mission rather than profit. Based in Arkadelphia, Arkansas, Southern served low-income populations in disadvantaged markets in the rural South and worked on a difficult task of revitalizing high-poverty communities. Even though Southern had implemented profitable operations, at one point the organization suffered substantial loan losses that threatened its existence. The case focuses on the CEO's decision regarding two loan portfolios: that of residential mortgages and small teacher-certification loans. The CEO must decide whether his organization can afford to continue offering those loans.