For the last two years, ReShonda Young has been in the process of opening the first Black-owned bank in Iowa. Young had opened her own businesses before — she founded and franchised the successful gourmet popcorn chain Popcorn Heaven in 2014 and ran her biological father’s business for nine years — but starting a bank from scratch takes time.
There is a lot of work to be done, a lot of capital to raise and a lot of “hands-on education. I’ve had to sit down with federal and state regulators, the attorneys. All the things, all the people,” Young said.
Although Young said she had never worked in a bank before, she’s “learned so much through this process,” she said, adding that she now knows banking “better than some bankers,” thanks to those who came onto the project to help.
The Bank of Jabez is well on its way to becoming a certified Community Development Financial Institution “that will promote economic growth in the underserved communities.”
“Although we will be a full-service financial services institution that addresses the banking needs of all people within the community, we will have intentional focus on servicing our community’s underbanked, low-income, and minority populations,” the organization’s website says.
Inequity abounds
The idea to open a bank came to her after a series of bad experiences at other financial institutions, which she said were likely due to racism. Young comes from an extensive business background as a successful entrepreneur, and received her bachelor’s degree in business management from Wartburg College in 1997. Using her expertise, she also provides coaching to other small businesses.
Despite being a well-established business owner with a reliable payment history, she was having difficulty securing funding to expand Popcorn Heaven in 2017. Young decided to sell her store to a white woman, along with the business plans she had for expanding. The same bank offered the white woman more than double the requested funds when she brought in the identical plans — plans that had been denied when Young proposed them.
In 2019, Young was using a different bank in the area when it underwent a staff change. Suddenly, what had been a positive borrower-lender relationship soured. “I got a phone call from the commercial lender and he just says to me, ‘ReShonda, we don’t want you here at our bank, and if you don’t move your accounts we will foreclose on you,’” she recalled.
Later that year, Young successfully sued the federal government for its inaction in enforcing anti-lending discrimination laws, but she said she couldn’t stop there. Empathy for other Black and minority populations in her community receiving similar unfair treatment in the financial sector left her wondering how something so systemic could be fixed.
“It was early 2020 and I was driving to work when I very clearly hear, ‘You’re going to start a bank,’” she said. Young is a woman of strong religious faith. She said she was praying for guidance on these issues when she heard God’s answer.
The bank gets its name from the Bible passage 1 Chronicles 4:9-10, which explains, Young said, Jabez being “born into pain … and this [bank] is being birthed out of a place of pain. But the scripture goes on to say how Jabez was more honorable than his brothers. And this institution is going to be a place of honor.”
Change on the horizon
While Young’s faith has played a role in the process of opening a bank, her mission is one that can be understood universally. “I want to help however I can without causing harm,” she said.
It has been over 20 years since the last Black-led bank was chartered anywhere in the U.S. Young’s goals for her bank’s future are intertwined with her hopes for the future of the community. Increasing access to capital and homeownership among Black and minority groups in Waterloo is at the top of her list, along with teaching financial literacy and providing tools and resources for people to grow their wealth.
According to data from the U.S. Census Bureau, the rate of African American homeownership across the nation was 44.9% at the close of 2022. For comparison, the homeownership rate in the non-Hispanic white racial group was 74.5%. This gap affects the entire country, not just Waterloo, or just Iowa. It’s the result of cyclical systemic inequities that make it harder for people of color to participate in the economy and build the generational wealth needed to break the cycle.
“Even though redlining is illegal, it still happens. I still hear those stories. I want to see opportunities for people to live in the places they want to live in,” said Young. Redlining is a term used to describe discriminatory practices by lending institutions to keep services and funding out of reach for people of color. The term originates from New Deal-era homeownership programs that intentionally excluded majority Black neighborhoods, marked in red on maps, from accessing the program benefits.
Young also has plans to heavily support the small business community and remove obstacles for minority entrepreneurs.
Although she won her case against the federal government to enforce a 2010 law requiring the disclosure of race and other demographics in their small business loan decisions, discriminatory lending practices won’t be reversed overnight.
“We’re able to create the culture that we know needs to exist. It’s important that we do this because if we continue to wait for other institutions to change their culture into one that’s more inclusive, we could be waiting for many more decades,” Young said.
Since the launch of this project, people throughout Waterloo and all over Iowa have been supportive of the Bank of Jabez. They have rallied around it as an idea, and as a symbol of hope, Young said. As the bank’s founder, she has been asked to speak in schools about the experience and teach basic financial literacy skills to students. She wants the younger generation to see their opportunities for success, and help them find the resources to reach it. This is what leads to change.
Learn more and stay updated on the bank’s opening status at www.bankofjabez.com.
