Black investors unveil first-of-its-kind deal for Utah community bank

A Black-led investor group that includes Dr. Bernice A. King, a daughter of civil rights icon Dr. Martin Luther King Jr., announced plans Tuesday to acquire Holladay Bank & Trust in Holladay, Utah. The group plans to build the $68 million-asset institution into a national Small Business Administration 7(a) lender.

Ashley Bell, the group’s leader, labeled the proposed transaction “historic” Monday in an interview. “There’s never been a Black bank created through the acquisition of a non-Black bank,” Bell said.

Bell serves as executive chairman and CEO of Redemption Holding Co., which will acquire and own Holladay. King will serve as Redemption’s senior vice president for corporate strategy and alliances and sit on Redemption’s advisory board. 

“In my father’s last public address on April 3, 1968, he preached the imperative to accelerate the financial inclusion of Black Americans by supporting mission-driven Black banks, something he called a ‘bank-in movement’,” King said Tuesday in a press release. “More than half a century of struggle and incremental progress later, we’re making good on daddy’s call to bank-in.”

Bell and King have collaborated on a number of initiatives aimed at boosting access to capital for Black small-business owners and consumers. Both were among the co-founders of the National Black Bank Foundation. In June, Bell and King teamed to launch Ready Life, a fintech dedicated to helping minority borrowers secure mortgages.

Bell did not disclose the price his group agreed to pay for family-owned Holladay, founded in 1974 by Ronald Spratling, an attorney and member of the family that owned a local hardware and lumber supplier. Bell also did not set a target date for closing the deal — which must be approved by Utah’s Department of Financial Institutions and the Federal Reserve — though he described Redemption’s dealings with regulators as constructive. 

“I’m not sure this deal is the first time” Black investors have sought to purchase a non-Black bank, “but it certainly is rare,” William Michael Cunningham, a longtime observer of the Black banks sector, said in an interview. “I hope they’re able to [succeed]. … I’ll be very interested.”

A focus on SBA

Redemption plans to maintain Holladay’s 10-person staff while adding a technology platform that would allow Holladay to originate 7(a) loans across the country. Historically, Black-owned banks have had limited involvement in SBA lending. Indeed, the 21 existing Black-owned banks have made just eight 7(a) loans in the fiscal year that began Oct. 1, according to agency statistics. 

The 7(a) is SBA’s flagship program, providing guarantees of 50% to 75% on small-business loans up to $5 million in size. 

Bell, who served as an SBA regional administrator from February 2018 to October 2020, before joining the Dentons law firm, said existing Black banks lack an SBA track record and have struggled to attract lenders with the requisite experience in the government-guaranteed sector.  Redemption has already hired a veteran SBA lender to lead its effort, Bell said. 

Redemption’s plans for an SBA emphasis come amid a record level of small-business formation. According to the Census Bureau, about 10.5 million entrepreneurs applied to start businesses over the past two years. Redemption is seeking to broaden access to capital for Black small-business owners, who have lagged other demographic groups in SBA funding. Through the first four months of fiscal 2023, Black entrepreneurs received 4% of 7(a) loan volume, about $412 million of $10.2 billion in approved funding. 

“There’s an incredible amount of [minority] entrepreneurs, especially African American women,” Bell said. “There’s so much potential. They just need resources. We’re seeking to tap into that entrepreneurial spirit.”

In syndication

Beyond SBA lending, Redemption plans to work with other minority depository institutions to facilitate syndicated lending opportunities for Black-owned financial institutions, focusing on the sports and entertainment vertical. Bell has already helped broker a number  of deals involving Black-owned banks.

In December 2020, Bell and the National Black Bank Foundation, where he serves as general counsel, helped arrange a syndicate led by Savannah, Georgia-based Carver State Bank that provided a $35 million loan for refinancing the Atlanta Hawks practice facility. In March 2022, Bell and National Black Bank Foundation helped put together a group of Black banks to finance a $25 million line of credit for Major League Soccer. 

Brokering similar deals can provide a source of high-quality credits for the Black banking sector, as well as raise Redemption’s profile. “It will show we can punch above our weight,” Bell said.

Redemption also plans to be an active mortgage lender. 

Redemption’s acquisition of Holladay will be “transformational,” Dhani Jones, who will lead Redemption’s advisory board, said Tuesday in an interview. Jones played 11 seasons as middle linebacker for three National Football League teams. 

“On the last day of Black History Month, it serves as a signal as we continue to press forward creating more equity across the country,” Jones said, adding he wants to act as an emissary connecting Redemption to underserved communities. 

“I’m not a banker, but I know what they can do,” Jones said. “I want to be part of growing this bank.”

Jones said he was grateful to Holladay’s current ownership team for agreeing to sell. “It’s an institution with deep roots in the community, a great reputation, great leadership. What better way to build than off that legacy.”

While the number of Black-owned banks has been declining for decades, falling to 21 in 2019, news from the sector has been more hopeful in recent weeks. A Black-owned institution, Adelphi Bank, opened in Columbus Ohio, after winning approval from the Federal Deposit Insurance Corp to become the first de novo in 2023.