Mission News Spring 2015

Southern Bancorp sponsored Crawfest Fun Run in Arkadelphia, Arkansas on May 16, 2015.

MISSION NEWS SPRING 2015

Table of

CONTENTS 3 From our Leadership 4-9 Southern Highlights 10 Southern Stories 11 In the News 12-13 Q1 2015 Snapshot 14-15 Employee Spotlight

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LEADERSHIP

From our

Darrin Williams Southern Bancorp, Inc. CEO It’s been a great year so far at Southern with lots of activity across the organization. Our work in some of America’s most underserved communities is leading to greater financial strength and stability among families and businesses. From lending to tax preparation to public policy successes, we’re excited about the progress we are making and the impact it is having in these communities.

This year has also been one in which we have made significant progress on our strategic vision. One of my main goals since becoming CEO has been to revisit the course set for Southern’s future. This process has involved significant input from our stakeholders, our customers, community leaders and our employees – all leading to a vision that aligns with what our founders intended for this organization, while being fine-tuned to meet the needs of our customers today and into the future. This new vision seeks to encourage personal and community economic growth using three primary pathways: jobs, housing, and savings – all of which provide the sparks needed to light the fire of economic opportunity.

I’m grateful for your support of Southern and request your help as we continue on our path of creating economic opportunity in the rural Mid-South and beyond. We need partners with a desire to make a strong economic and social impact in distressed communities. If you or your organization is interested in playing a role in the work we do, we’d love to speak with you. Together, we can chart a stronger, brighter course for rural America.

- Darrin Williams

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Southern HIGHLIGHTS Encouraging Savings through Public Policy From basic savings accounts to matched savings accounts to financial education and credit counseling, savings impact one’s ability to build net worth – the key to economic security and mobility.

Southern regularly seeks out ways to encourage savings, from the classes we teach in our communities to the savings products we offer within our branches; however, we are also actively seeking to change savings habits on a much larger scale through our public policy work.

In 2014, the 113th Congress passed the federal American Savings Promotion Act. Sponsored by Arkansas Senator Tom Cotton, this act allows banks and credit unions to encourage savings with cash-prizes awarded through savings raffles. These no-risk programs encourage customers, many of whom have never had a savings account, to not only open them, but to also make regular deposits. The goal of the program is to provide a fun way of encouraging people to think about their financial future and improve their opportunities to build net worth.

The federal legislation legalized the practice, but left the authorization and regulation of it to the states. Southern’s public policy team realized this was an opportunity to open the door to this practice in Arkansas during the most recent state legislative session. Our policy team worked with State Rep.

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ABOVE: Ark. Gov. Asa Hutchinson signs the Arkansas Savings Promotion Act into law .

Reginald Murdock of Marianna, Ark. and State Senator Terry Rice of Waldron, Ark. on legislation that would authorize Prize Linked Savings programs in the state. By an overwhelming majority, House Bill 1642, the Arkansas Savings Promotion Act, was passed by the legislature and signed into law as Act 589 of 2015.

Southern and other financial institutions are now able to explore Prize Linked Savings as a future option in Arkansas. Similar legislation is also being explored in Mississippi for their next regular session.

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Southern HIGHLIGHTS Economic Development Success One of Southern’s most successful recent job creation programs is the Helena Jobs Incentive, a partnership with the U.S. Department of Housing and Urban Development.

The Helena Jobs Incentive is designed to incentivize the creation of new jobs in Helena-West Helena, Arkansas. Since its inception we have invested over $1 million back into the community by supporting business startups, downtown revitalization projects, home purchases and repairs, and job stimulus in one of the nation’s most distressed counties.

On March 31st, the formal dedication of Helena’s newest employer and a Helena Jobs Incentive awardee, Enviro Tech Chemical Services marked great strides in the future of Helena-West Helena’s local economy.

Enviro Tech’s CEO said during the dedication, which also featured Arkansas Governor Asa Hutchinson, that the company expects to eventually employ 80 by the end of 2015, which would place it among the largest employers in the county.

To read about the Enviro Tech dedication, visit our In The News section.

VITA volunteers at a Super Saturday event in Eudora, Ark.

Making Taxes Less Taxing For the past eleven years, a growing number of volunteers from Southern have taken the initiative to become IRS certified to help people file taxes.

The program, called Volunteer Income Tax Assistance or VITA, is a national program of the IRS in which income eligible taxpayers can have their taxes prepared and filed for free. Southern became involved over a decade ago because we realized the impact that such a program could have on people paying fees for tax preparation – people who count on every dollar. We also know how important it is for taxpayers to take advantage of eligible tax credits such as the Earned Income Tax Credit or EITC, often described as the most effective anti-poverty tool in America.

Over the years, Southern has helped taxpayers in rural communities receive nearly $36 million in refunds and credits, of which over $18 million has come in the form of the EITC. This year’s VITA program was even more successful than previous years, with 41 volunteers preparing and filing almost 3,000 tax returns for $6.1 million worth of tax refunds and credits!

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Living Our Core Values One of the differences between Southern and other financial institutions is that we exist to create economic opportunity for disadvantaged communities and individuals. This means that in addition to answering to our customers and our shareholders, we place great significance on the economic impact that our work has in our communities. It’s our mission, and it’s what sets us apart from large banks that often overlook smaller, rural markets like the ones we serve. To underscore this, we recently embarked on a new internal campaign to emphasize the core values we believe are crucial to our ability to fulfill that mission. We call it R.A.I.S.E. R.A.I.S.E. stands for Relationship, Accountability, Innovation, Sustainability and Empowerment. Through extensive research, we found that these core values are what makes up Southern’s DNA, and they are represent the ideals that we want to live day in day out throughout our organization.

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Southern HIGHLIGHTS To underscore these values, we launched an employee reward and recognition program that encourages everyone in the organization to recognize those who they see living the core values on a day to day basis. Be it developing lasting relationships with customers and the community, creating sustainable or innovative new programs or simply empowering each other, these core values are the building blocks to Southern’s DNA.

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SOUTHERN STORIES Southern believes that small business is a key ingredient for creating economic opportunity. For customers like Dawson Employment Services of Blytheville, Ark., Southern provides working capital to help them grow and thrive.

Click here to watch Linda Moore’s story

Watch this video and others here.

Southern Bancorp on Vimeo www.vimeo.com/southern

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SOUTHERN In the News Memphis Business Journal

April 9, 2015

Delta region receives $1 million federal grant

Tennessee, Mississippi and Arkansas could see an increase in job growth through a new, $1 million grant.

Read full article here.

Talk Business & Politics

March 31, 2015

Enviro Tech celebrates new facility at Helena Harbor

...the California food safety and water treatment company’s new plant location in Helena Harbor, a port and industrial park located on the Mississippi River...

Read full article here.

Associated Press

March 7, 2015

Helena West Helena seeing positive changes

“People are starting to believe again that good things can happen here,” said John Edwards, economic development director at the Helena Harbor. “That’s contagious.”

Read full article here.

Yahoo! Finance

February 25, 2015

Former CDFI fund director joins Southern Bancorp

Ms. Donna J. Gambrell, the longest serving director of the U.S. Treasury’s CDFI Fund and first African American woman selected for that position, has been appointed to its board of directors.

Read full article here.

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MARGIN Q1 2015 Southern Snapshot

Southern believes that mission and margin are perfect partners in reaching our goals. This snapshot provides a high-level glimpse of this work and our impact on our communities.

Total Originations and Renewals

By Year $543,000 7,901

7,436

By Quarter

$530,566

$300,000,000

5,000

1,733

1,000

$164,570

1,873

$185,649

$100,000,000 Q1 2014

Q1 2015

Year 2013

Number of loans

Year 2014

Loans in $ (Thousands)

Q1 2015 Southern Bancorp

All CDFIS

ROAA

0.99

0.70

0.97

ROAE

8.31

6.31

9.22

Nonperforming Assets

1.16

2.09

0.99

Efficiency Ratio

66.05

79.55

66.42

Net Charge Offs

0.15

0.14

0.07

11.90

22.98

10.19

Texas Ratio

CDFIs $1-3 Billion

END OF 2014 Southern Bancorp

END OF 2013

$1-3 All CDFIS CDFIs Billion

Southern Bancorp

$1-3 All CDFIS CDFIs Billion

1.00

0.69

0.99

0.83

0.57

0.94

9.08

5.68

9.61

6.82

4.54

9.62

1.03

2.4

1.05

0.83

2.87

1.68

64.2 0.25 11.28

78.54 0.31 26.04

66.44 0.15 10.86

66.97 0.34 16.4

80.18 0.48 33.18

67.24 0.26 15.32

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MISSION

Created 141 opportunities for quality, sustainable living by: Providing 99 mortgages (31 of which were first time homebuyers), and counseling 15 new clients.

C r e at i n g H o u s i n g Opportunities 1411

152

664

Q1 2015

Q1 2014

Year 2014

Supported 2,536 jobs through:

437 commercial loans, 77% of which were in low income areas.

Supporting Entrepreneurs 2,5362

Q1 2015

1,444

Q1 2014

8,871 Year 2014

Empowered 3,761 people to save and build assets through:

1,163 first time savings accounts, 38 new matched savings accounts, completing 2,714 tax returns free of charge, and counseling 20 new people in credit reduction and savings.

Building Economic Security 3,761

3,763

Q1 2015

Q1 2014

7,455 Year 2014

Does not include financing of 612 housing units in Q1 2015.

Calculated utilizing an in-house economic multiplier based on NAICS code, average employees, average salary, and other industry data.

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EMPLOYEE Spotlight Monte Hodges

Arkansas State Representative Southern Bancorp VP of Commercial Lending Blytheville, Ark.

What do you do for Southern?

I help customers connect their personal or business goals with the capital to make them reality. I do this by meeting with customers about their commercial, consumer or real estate needs and then making initial credit decisions as to whether their loan request meets the credit underwriting requirement.

What’s the most rewarding part of your job?

The satisfaction of knowing that I was instrumental in helping someone purchase a home or start their own business. I also enjoy educating customers about ways to save and offering tips for improving one’s credit.

What made you decide to run for office?

After serving one term on the Blytheville City Council, I realized that in order to pursue the changes I felt were needed, I would need to be in office at the state level. As it turned out, our local member of the House was vacating the seat due to term limits, and I took the opportunity to throw my hat into the ring. In this role, I can have a much larger impact on all of Mississippi County.

I feel that I was put on this earth to serve, and I’m enjoying every minute of it.

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What has been your favorite accomplishment in office?

Without a doubt it was being the lead sponsor of the Big River Steel legislation in 2013 that authorized the use of state incentives to help Big River Steel get off the ground. Today, Big River Steel is under construction and estimated to employ more than 500 highly paid workers once it is up and running.

Other businesses are also starting up around the new site, which has everyone in Mississippi County excited. Like many counties in the Delta, we have experienced our share of challenges, but projects such as Big River Steel are most certainly changing the futures of many of our residents, and that’s the type of change I was hoping to make as an elected official.

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We want to hear from YOU!

If you’d like to know more about how Southern is creating economic opportunities in rural America, or find out how you can invest in the work that is empowering people and transforming communities, drop us a line at southern@banksouthern.com