CredAbility CEO: ‘Don’t think you have to do the same thing for your whole life’

Managing debt. That’s what much of Phil Baldwin’s career has been about — as an accountant, banker and current CEO of CredAbility, the Atlanta-based nonprofit that gave credit counseling advice to nearly 300,000 consumers across the country last year.

Phil Baldwin

Phil Baldwin

During his career, Baldwin, 54, has wrestled with the effects of rural poverty in Arkansas as head of a bank charged with improving access to capital for farmers, entrepreneurs and low-income consumers. Now, he’s trying to lead CredAbility — known for helping consumers chip away at their debt loads — in a new direction as the economy improves and the demand for credit counseling declines.

Baldwin wants CredAbility to start giving financial planning advice to the low- and moderate-income consumers generally neglected by traditional for-profit firms. He talks about that effort, as well as what he’s learned during his three decades in the financial world.

Q: Early in your career, you were entrusted with access to a lot of money while working as an accountant for a wealthy Arkansas entrepreneur, Frank D. Hickingbotham, who founded the TCBY yogurt chain. Would you please discuss?

A: He had several houses around the country and traveled a lot. He would leave me with his checkbook with $80 million to $90 million of availability in signed checks.

He took me to lunch when he gave me the checkbook and said, “The only people who will ever steal from you are those who you trust, because if you don’t trust someone you won’t give them the opportunity. You’ll keep your assets segregated.” Then he handed me the checkbook.

What he was saying is that I trust you. Don’t disappoint me. I always remembered that.

I kept that checkbook in the safe. I was afraid someone might get a hold of it. I probably would have died protecting it.

Q: Later on, while working in corporate finance for Dillard’s, you had a disagreement that led you to change your career path. Would you please discuss?

A: I was having an argument with our attorney over a couple of sentences in an SEC disclosure. I went home and told my wife, “Only CPAs and lawyers can love this stuff. I don’t really want to be known as the guy who got the 10-K exactly right and have that on my tombstone. There’s got to be more than that.”

Probably two weeks later, I got a call from the CEO of Southern Bancorp in Arkansas. They were looking for a chief financial officer who would then possibly become CEO. It’s a community development bank — a bank with a social mission. The mission was to bring access to capital to rural Arkansas. A lot of folks are low-income and they have a hard time getting approved for a loan.

Our bank, owned by large foundations, tried to do something different. We’re a normal bank with a nonprofit arm. We would be more flexible on our loan underwriting.

I saw up close and personal the challenges that low-income families have. I was in the bank one day and there was a gentleman there who was trying to get a loan from us to get his daughter a prom dress. He didn’t have the cash and he knew he couldn’t get a loan somewhere else.

Our bankers couldn’t make him the loan because of his very low credit score. When I walked out of the bank, he was sitting in the parking lot crying. I walked him back in there and said we were going to make him the loan out of the nonprofit.

That stuff affects me. I don’t know how you can’t be affected by that. He probably never paid us back because he couldn’t.

Q: After 10 years of heading the for-profit/nonprofit bank, you decided to put both feet in the nonprofit world by leading CredAbility. Would you please discuss?

A: We’re the tip of the spear. When people get in financial trouble, they call us for help. The first thing I did when I got here was to go up to our call center and listen to the counselors.

My daughter is 24. I sat in on a phone session with a young lady about my daughter’s age, so it connected with me. She had had an abusive relationship in her home life and had left. Now she’s out all by herself and she’s starting to go to a community college to get her future in order, and she’s charged up a bunch of stuff on credit cards.

I can just envision this girl out there by herself struggling. You could just tell this was the most important call in her life. Her voice was quivering. You could hear the fear on her end of the phone.

We couldn’t change her situation in a one-hour call. But halfway through it, she began to see she had options. We made a difference in her life.

Q: Ever since that watershed dispute with the Dillard’s attorney, making a difference seems to have driven your career decisions. Do you have advice for people thinking about switching careers?

A: As I look back on it, I think I made a change about every 10 years. I don’t think I did that intentionally, but I liked it.

In fact, I talk to my children about that now. Don’t think you have to do the same thing for your whole life. It’s OK if that is your passion. But if you want to make a change, do it.

Every time I made a change there was a nervousness because I was stepping into the unknown. But there was also a spring in my step because I was doing something different. I think it’s useful to test yourself. Can I do this?

But you want to be careful. You just don’t want to wake up one morning and say I want to change my life. We all have responsibilities.

But there’s great satisfaction in making a change — especially if it’s something you’re passionate about and that’s meaningful beyond just making money.

Q: Right now, you’re attempting to make a substantial change at CredAbility. Would you please discuss?

A: Coming from my world in banking and seeing the challenges people face in navigating their financial lives, I believe there’s a tremendous need for financial advisory services for low- and moderate-income families. They don’t have access to the financial advisers like Goldman Sachs and Merrill Lynch because they don’t have large assets to manage.

I think CredAbility has an opportunity to step into that role. Right now, the counselors are focused on crisis activities like helping people avoid foreclosure. We would move from the emergency room to a longer-term relationship, such as managing cash flow, looking at ways to increase disposable income, raising credit scores, improving net worth and estate planning. We would help people establish short-term and long-term goals.

We’ve got a $1 million grant from the Goizueta Foundation to pilot this project in the Hispanic community in Atlanta to see the best way it would work. We believe that this type of high-quality financial planning service for struggling low- and moderate-income families has not been done in this country. We spent the last year looking for examples. This group is not being served.

Each week, Sunday Business Editor Henry Unger has a candid conversation, called “5 Questions for the Boss,” with a top executive in Georgia. Some remarks are edited for length and style.

9 comments Add your comment

bigbill

February 9th, 2013
2:40 pm

I would hope that this change of emphasis away from “emergency room” activities toward helping clients “manage cash flow,” and increasing disposable income, raising credit scores,improving net worth and estate planning, etc. does not mean a radical change in the core mission. Changing the core mission was an issue, apparently, at Mr. Baldwin’s former place of employment, Souther Banc Shares of Arkansas. See this link:

http://www.arkansasbusiness.com/article/32532/ex-ceo-of-southern-bancorp-rebuts-alleged-backdrop-to-his-retirement

Jill

February 10th, 2013
9:56 am

It’s great to see that Phil Baldwin’s passion to help individuals succeed financially has carried over into his position with CredAbility. While in Arkansas, he was instrumental in helping individuals succeed by implementing and supporting programs to increase the high school graduation rate in rural Arkansas communities, removing many of the financial barriers for high school graduates in those communities to go to college, helping finance small businesses and putting programs into place that would help those businesses be successful. At the same time, he helped Southern Bancorp grow from a $200 million bank holding company into a $1 billion dollar company with focus on transforming lives in the Mississippi Delta. We hated to see him leave Arkansas but it’s good to know that his work to bring tools for financial success to low to moderate income families continues on.

Wesley Kluck

February 10th, 2013
10:01 am

I worked very closely with Phil Baldwin in Arkadelphia, Arkansas for 5 years on our community’s strategic plan. I was one of the co-chairs of the plan and Southern Bancorp’s investment in our community and specifically the leadership provided by Mr. Baldwin has transformed our community. This effort has leveraged over $50 million dollars in community investments since 2006 and that’s a lot for a town of 10,000 people. If Southern’s core mission is at question, then I can personally assure you Phil Baldwin directed it in absolutely the proper and right direction. Since his leaving, there has been a change in the core mission which you might be alluding to which has moved it away from the direction Phil Baldwin had – but Phil’s core mission increased the corportion’s holdings into a billion dollar bank which invested about half of their earnings in the communities they served. It’s OK to reference an article if you know the facts and the reliability of the article and that they are all true – I can state from personal involvement for 5 years what I know is true.

Mortimer P.Smedley

February 10th, 2013
8:46 pm

What is up with this ‘would you please discuss’…. Is this Sheldon Cooper writing this ? Is he saying it in a Doctor Who Dalek voice?

Guest

February 11th, 2013
8:23 am

“They don’t have access to the financial advisers like Goldman Sachs and Merrill Lynch…”

And that’s a bad thing?

Chris

February 11th, 2013
9:01 am

Thanks for the advice! I have known so many people stuck in jobs they hate and want to change but never do fearing the unknown. It is true you may do anything you want if you put you mind to it.

Mary

February 11th, 2013
5:13 pm

Phil Baldwin failed to mentioned within two months after coming to Credability he laid off 83 staff members. He certainly did not give financial advice to them. He did put many of us in the position of being the low to moderate income people he now wants to serve. He as Big Bill states destroyed the Core Mission and Values of the Organization. He cut those folks so he could be paid an overinflated salary. He lost good Counselors and great managers.

vampire bill

February 11th, 2013
7:21 pm

That’s a distortion of the truth Mary and its incorrect to point that at Phil. Credability had over staffed to handle the large foreclosure crisis and had to cut back when the numbers didn’t work anymore. That’s part of being in business. Sometimes tough decisions need to be made. Staffing mistakes were made before Phil arrived and he did what he was hired to do, Keep the company solvent. Everyone knew those layoff’s were coming.

Mary

February 12th, 2013
8:42 am

Say what you may but when your end result is inexperienced Counselors who are overworked the Clients are the ones who ultimately suffer. For those who were let go it it was a mixed blessing. For the sake of our Clients I hope Phil’s plan works.