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Our small businesses are worried, but they are resilient: Southern Bancorp CEO

Southern Bancorp CEO Darrin Williams joins Yahoo Finance’e Alexis Christoforous and Brian Sozzi to discuss the impact of the coronavirus on rural America.

Video Transcript

ALEXIS CHRISTOFOROUS: Welcome back to Yahoo Finance. We know that banks, both large and small, are trying to help Americans who are reeling from this coronavirus pandemic. They are trying to help them during this outbreak to make their bills and to buy some time. And that includes Southern Bancorp of Arkansas.

And joining us now is the CEO of that bank, Darrin Williams. Thanks so much for being with us, Darrin. First up, just how are you helping your customers through this unprecedented crisis?

DARRIN WILLIAMS: Thank you for having us, Alexis. We are trying our best to help our customers and meet their needs where they are. So we had several customers who are, for example, in the hospitality industry. Because people are social distancing, they don't have access to revenue right now. So we're working with them to extend maturities, to actually give them some loan forgiveness, three or four to six months of loan forgiveness or interest-only payments-- any way we can do to help them weather this storm with this pandemic.

BRIAN SOZZI: Good morning. Good to see you here. What are you seeing in terms of small businesses? Is there optimism that they can come back after being closed, let's say for a month, or potentially even longer?

DARRIN WILLIAMS: Well, sure. Our small businesses are worried. But this is-- we operate in the Arkansas and Mississippi Delta. And people are very resilient.

And so we're going to make it back from this. And we're going to help our customers make it back from this. So there is optimism. But, of course, along with this-- the longer we go with this social distancing and with-- with restaurants and businesses closed, the more difficult it will be for them to come back. And we're going to do all our-- all we can to help them make it back.

ALEXIS CHRISTOFOROUS: You, Darrin, of course, during the recession-- the Great Recession of 2008 and '09, there was a systemic problem with our banks, and they were not well capitalized. Different story, of course, today. How well-positioned is your bank? If this were to be a prolonged downturn and you had to extend relief to your customers, how well-positioned is your bank to survive something like that?

DARRIN WILLIAMS: Well, you're exactly right. So the banking industry now across the board is very well capitalized, much more so than prior to the Great Recession. So we're in a great financial position. We're coming off our strongest year ever. Our capital position is strong.

And so we'll weather this storm. But, of course, the longer it goes, the more difficult it is not only on our customers, but also on our bank. But we believe that we'll be able to weather this storm, as long as it's not prolonged.

BRIAN SOZZI: Darrin, you know this. We're now at a zero interest rate environment, in large part because of some of the things that Alexis just mentioned. How are you navigating, or how are you managing your business differently because of this very, very, very low-rate environment?

DARRIN WILLIAMS: Well, you know, it's really not for bankers to try to guess or predict where the interest rates are. We manage to spread it, right, between what we borrow money what we loan money. So we're having to manage the spread right now, like we always do. And we'll make it through these times as well.

ALEXIS CHRISTOFOROUS: Darrin, what do you make of the stimulus package that we're expected to get, possibly today or tomorrow from Congress? Does it go far enough? And is the federal government working hand in hand enough with banks, especially regional banks like your own, during this crisis?

DARRIN WILLIAMS: Yeah, well, I think-- I think the package-- the stimulus package will be good for our borrowers and good for banks. Clearly, anything that we can do to give our borrowers some relief, some time to pay-- because even once businesses are opened back up, they've lost a significant amount of revenue. And so they're gonna have to have some time to catch up.

We can extend their maturities, give them some support during this time, so they can make it back. And I'm proud to say that we're working hand-in-hand with our federal delegation, our state delegation, both Arkansas and Mississippi, where we're based. And the packages are good. Clearly, all that we can do to help our borrowers is what we're looking for.

ALEXIS CHRISTOFOROUS: You know, Darrin, I'd like your thoughts on this idea. Because this is an unprecedented time in our history, do you think the idea of a federal-mandated moratorium on all loans-- mortgages, student loans, et cetera-- do you think that that should be something that's on the table and that lawmakers should be considering?

DARRIN WILLIAMS: Well, I think you should consider everything. This is a an unprecedented pandemic, and so everything should be on the table. I'm not sure that's the right measure. But at least I think it should be given some consideration.

You know, during this difficult time, we still have people who are making it just fine. And we still have a pretty good loan demand. People are still calling about new loans. We're spending a lot of our time doing workouts for our existing customers.

But there is still some robust loan demand out there. So I'm optimistic about us being able to make it through this.

ALEXIS CHRISTOFOROUS: When you say robust loan demand, what are they asking for loans for?

DARRIN WILLIAMS: So right now, this is-- a lot of our work is in the agriculture space. And so farmers are about to start planting. They're starting to put their seed in the ground. And so they need loans that to plant and feed America, right? And so that's an example.

We still have small businesses that are not as impacted by this. They're also still looking to grow and expand. Now clearly the loan demand's down. I'm not saying that it's not down. It is down.

But there's still some demand. I'm not sure that a federal mandate or moratorium is the right thing at this time.

ALEXIS CHRISTOFOROUS: All right, and ironically, of course, our farmers, who were hurting during the China trade war, are actually the folks we need the most right now as we continue to have the food supply flow here in this country during this time. Darrin Williams, CEO of Southern Bancorp. Thanks so much, and good luck to you.

DARRIN WILLIAMS: Thank you so much. Thanks for having us.