Last week, the board of directors of the Global Alliance for Banking on Values met in Little Rock, and members of its North American chapter visited Helena and Clarksdale, Mississippi. Southern Bancorp of Arkadelphia, which is one of GABV’s 27 member banks, hosted the tour.
I wasn’t on that tour, but Darrin Williams, CEO of Southern, said Marcos Eguiguren, the executive director of the GABV, commented that he hadn’t realized that there was such poverty in the United States. A Spaniard like Eguiguren might be forgiven for his ignorance, but I fear that many of us right here in Arkansas forget.
Not all of the banks in the GABV have the same mission as Southern, which is a commercial bank that uses its profits to support poverty alleviation efforts like the KIPP charter schools in Helena and the Arkadelphia Promise college scholarship fund. Some of them are focused on supporting entrepreneurs; others only lend to environmentally responsible borrowers. The group’s Bangladeshi member, Brac Bank, is deeply involved in helping its customers afford the kind of houses that won’t be washed away every time there’s a flood.
But all of them view banking as something more than just a profit-making enterprise, as Peter Blom, chairman of the GABV, emphasized in an interview that Williams arranged for me.
“When it comes to the values,” Blom said, “we have a lot in common. That we want to be there for people is something we strongly have in common.”
Now, I’ve talked to a lot of bankers over the past couple of decades, and I can tell you that they all see banking as something higher than just making a profit, just as we journalists view our craft as something more than just a way to sell subscriptions and advertising. But talking to Blom is not like talking to the Arkansas bankers that I talk to regularly — and not just because of his Dutch accent.
Blom was one of the first employees of Triodos Bank when it was founded near Amsterdam 35 years ago and is now its CEO. He looks and dresses like the CEO of a bank roughly the size of Bank of the Ozarks who will turn 60 next year. But when he starts to talk about banking, he sounds like that guy who, while he was still a teenager, helped create a market for organic foods.
He acknowledges that banks have to make a profit — and Triodos does, and pays dividends. But he is not at all interested in making a big profit, and thinks any bank that is profit-centric is short-sighted. Shareholders seem to be pretty far down his list of concerns — and institutional investors are not on his radar at all. The future of banking, he says, is in steady, reliable, modest profits that allow banks to remain closely involved with the businesses they lend to over the long term.
“I can claim that shareholders in our bank have a better return than shareholders in the big banks,” he said — especially those shareholders who want to know that something good and worthy is being done with their money. “You cannot be just a shareholder and only look at short-term results,” Blom said.
Triodos advertises itself as a different kind of bank, even in Europe. Its marketing slogan is “Not for sale.”
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Triodos, Williams said, “has done a great job of making profits from its mission, not making profits its mission.” Even here in Arkansas, Williams said, he had detected “an interest in not just doing well but doing good. Millennials really are asking what my money is being used for.”
In furtherance of its mission of trying to alleviate poverty in its communities, Southern is working on a lower-cost alternative to the predatory payday loans that enslave so many low-income borrowers. Arkansas’ usury law finally drove the storefront loan sharks out of the state, but they are Southern’s biggest competitors in Mississippi. (Arkansas law will limit the interest on Southern’s product to 17 percent or less, Williams pointed out.)
After spending much of last week with the GABV members, Williams sounded energized, throwing out crazy ideas like texting photos to customers to remind them of what they are saving for.
In the meantime, Southern is looking for ways to raise more capital to replace its $33.8 million in federal TARP funding before the mandatory interest rate goes up in a couple of years.
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Gwen Moritz is editor of Arkansas Business. Email her at GMoritz@ABPG.com. |