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Leadership Change Causes Ripples at Southern Bancorp

5 min read

The past 12 months have produced a round of uncharacteristic change at Arkadelphia’s Southern Bancorp Inc. The staff moves range from top executives to middle management.

The latest change was effective Feb. 20 with the hiring of a new president and CEO of the holding company’s commercial bank, Southern Bancorp Bank: John Olaimey, former executive vice president of Little Rock’s Centennial Bank who left banking after the 2008 sale of Centennial to Conway’s Home BancShares Inc.

In some cases, personnel moves at the $1.1 billion bank holding company reflect an unusual out-with-the-younger, in-with-the-older twist.

A succession plan announced by the company in January 2011 with the "retirement" of its top executive, Phil Baldwin, 52, has vaporized. Baldwin declined comment about why he left Southern Bancorp.

When his departure was announced, the company announced that Baldwin would remain "at Southern for several months to ensure a seamless transition to new management." However, Baldwin was gone by the end of the month.

(Click here for a related story on the 2010 departure of a Southern Bancorp nonprofit executive.)

His retirement was short-lived, too.

Less than six months later, Baldwin took a job as president of CredAbility of Atlanta, a national nonprofit credit counseling agency.

Hired as the chief financial officer in 2000 and promoted to president and CEO in 2002, Baldwin directed the growth of Southern Bancorp into America’s largest rural development bank.

The company established a national reputation for blending community development banking with nonprofit efforts in communities in southern and eastern Arkansas and western Mississippi.

"Phil stepped down because the working conditions got too difficult for him to do his job," said a former Southern Bancorp executive who worked closely with Baldwin.

What pushed Baldwin to leave? According to some current and past Southern Bancorp staffers: friction with Walter Smiley, the 73-year-old chairman of Southern Bancorp who has remained on the board of directors since its inception in 1988.

Smiley stepped in as interim president and CEO of the holding company and has retained the position and operational control ever since. Even before he held the formal titles, Smiley has long held power at Southern Bancorp without any stock ownership.

Southern Bancorp’s roster of shareholders is dominated by names such as the Walton Family Foundation, the MacArthur Foundation and Metropolitan Life Foundation as well as corporate benefactors.

Smiley’s ascent to president and CEO, without the benefit of a nationwide search, marks a departure from the norm for Southern Bancorp Inc., typically led by an experienced banker.

Smiley is no stranger to understanding corporate balance sheets. His career was built on the success of Systematics Inc., the Little Rock financial software and services firm he founded in 1968 and led for 20 years.

Dominik Mjartan, senior vice president and a spokesman for Southern Bancorp, downplayed any fractious relationship between Baldwin and Smiley. Mjartan, who fielded all calls to the company, also said Smiley’s lack of traditional banking credentials was a non-issue.

"I don’t think it has any real bearing on operations," he said. "I don’t think we could find an executive with more credibility and history in the banking industry than Walter. Based on everything I know, he’s one of the most impressive bankers I’ve ever known."

Mjartan said the decision to make Smiley the permanent CEO of Southern Bancorp, without a formal search for other candidates, was easy.

"We saw a need to have Walter stay longer," Mjartan said. "He’s been the off-and-on chairman of the organization over the years. There was no big change. He’s been a leader of this organization since the beginning."

Other Changes
Olaimey’s recent hiring wasn’t part of the original succession plan at Southern Bancorp outlined in the announcement that also accompanied Baldwin’s departure in January 2011.

At the time, Scott Fife was named president and CEO of Southern Bancorp Bank, overseeing operations with 42 locations in Arkansas and 16 in Mississippi. Last month, Fife returned to his former position as president of Southern’s three-branch El Dorado market.

"He did a fantastic job after Phil left," Mjartan said. "He’s an impressive banker with strong lending skills. I think he decided that the travel and demands of the job were putting a toll on his family."

Also gone from the succession plan is Brent Black, Southern’s 36-year-old chief financial officer whose promotion to senior vice president coincided with Baldwin’s retirement in January 2011. Black left the company in May to go two blocks down the street to join Summit Bank of Arkadelphia.

In an October 2009 interview with Arkansas Business, Black spoke fondly of helping oversee a profitable and growing bank network as well as a philanthropic organization that makes a difference in people’s lives.

"Each day, I get to switch back and forth between the two, and I love it," Black said at the time.

Black declined to comment on his decision to leave Southern Bancorp and return to conventional community banking.

The CFO position at Southern Bancorp remained vacant for seven months until 61-year-old Robert Cern was hired from Virginia, marking his return to banking after a five-year hiatus.

Recent resignations include the company’s three-member human resources staff, who decided to leave despite not having new jobs lined up, according to company sources.

"There are a lot of things going on that we don’t feel good about," said one Southern Bancorp staffer, referring to a change in the family-friendly corporate culture since Baldwin left.

"It’s been nothing dramatic," Mjartan said, regarding any internal changes during the past year. "I think most people are optimistic and excited."

Asked to contrast the management styles of Smiley and Baldwin, Mjartan indicated there wasn’t much difference.

"I’m not sure it would be fair for me to characterize his style, but Walter’s style is very transparent, a direct communicator, a very healthy thing," he said. "It’s not that Phil wasn’t transparent. This is just from my perspective."

Mjartan discounted talk that Smiley’s son Vance would be joining Southern Bancorp soon, in the newly created position of chief operating officer.

"He’s strictly a contractor," Mjartan said of Vance Smiley, president of Smiley Technologies. "Some contractors become more intertwined with the company than others, and he works with the company very closely. But he has no official title with the company and is not an officer."

Smiley Technologies was launched by the Smiley family in 2002 to take on the data processing needs of Southern Bancorp.

That contract, described as an annual deal now worth $2.5 million, also includes managing the company’s computer network.

Walter Smiley’s daughter, Elizabeth Glasbrenner, serves on the Southern Bancorp Community Partners board of directors, overseeing Southern’s nonprofit operations.

Glasbrenner also is vice president of administration at Smiley Technologies.

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