Redemption’s timing provides a glimmer of hope amid national tension over racism, following the murder of George Floyd in 2020, the Black Lives Matter movement and, most recently, the expulsion of two Black Tennessee lawmakers from the statehouse. As many as 65 percent of Black Americans say the increased national attention on racial inequality has not led to changes that improved their lives, and 44 percent say equality for Black people in the United States is not likely to be achieved, according to an October 2021 survey of Black Americans by Pew Research Center. Respondents say overhauls of several U.S. institutions are needed to ensure fair treatment—including support for Black businesses—to advance Black communities.
According to a 2020 report by the U.S. Federal Reserve, more than half of companies with Black owners were turned down for loans, though they were the most likely to apply for financing. Even when Black business owners did get approved, their rate of failure to receive full financing was the highest among all categories by more than 10 percent. They were also most likely to apply for a credit card and faced the highest rate of rejection.
Black-owned banks flourished in the late 19th and early 20th centuries because they were the only ones to lend to African-Americans, whose neighborhoods were rejected by and walled off from other banks. At the time, a number of Black business hubs flourished, creating “Black Wall Street” communities in places like Tulsa, Oklahoma, which was ultimately burned down in the 1921 Tulsa race riot.
Since 2020, a number of companies have attempted to address the racial wealth gap. PayPal, for instance, made a $535 million commitment to invest in minority-owned businesses. JPMorgan Chase said in 2020 it would spend $30 billion over five years on minority lending, while Citibank said it would spend $1.1 billion over three years. Other institutions, such as Rocket Mortgage and loanDepot, are also now providing financial services that may be better tailored to communities of color and offering loans that require less money down or to people with more nuanced credit ratings.
Today’s 16 Black-owned banks hold less than 0.03 percent of the assets at all FDIC-insured banking institutions—or $5.2 billion in total assets—and just 1.6 percent of the assets at minority depository institutions tracked by the FDIC. Because they are also less likely to have online banking services, they run the risk of losing customers if they continue to fall behind their nonminority peers in terms of digital banking offerings, says Michael Neal, principal research associate at the Urban Institute, a nonprofit that provides data and evidence to help advance upward mobility and equity.
“There is a risk that these particular institutions won’t continue to thrive in this brave new world of digital banking,” Neal says. “That really limits the reach of institutions to people who historically have been shut out.”
Redemption should offer a fresh change, Bell says. The acquisition will inject capital into Holladay Bank & Trust, which will be used to upgrade the bank’s technology and add digital banking apps and online services. The hope is that, as the only Black-owned bank between Los Angeles and Houston, it will serve people no matter where they live. “We’re the first Black bank in the Rockies, which has been a desert for the minorities that live here,” Bell says.
