Two new Black-owned financial institutions have announced plans to provide services to the Black community.
In Utah, Black investors announced on Feb. 28 that they have purchased a white-owned depository bank. Their investment group, Redemption Holding Company (RHC), said it wants to re-orient the bank to serve a majority Black clientele.
RHC purchased the assets of Utah-based Holladay Bank and Trust. Once they receive federal regulatory approval, the company plans to rename the institution Redemption Bank and provide banking services to Black people in the Mountain West region.
The establishment of Redemption Bank will be a historic first: the first time a white-owned commercial bank is converted to a Black-owned Minority Depository Institution––a bank with a board of directors who are mostly people of color, and that is mostly designed to serve people of color.
RHC counts among its investors Ashley Bell, the former Southeast regional director for the U.S. Small Business Administration under the Trump administration and a former White House Policy Advisor for Entrepreneurship & Innovation. Bell will serve as RHC’s executive chair and chief executive officer.
Rev. Bernice King, an attorney and the daughter of Coretta Scott King and Martin Luther King Jr., will be RHC’s senior vice president of corporate strategy and alliances.
Retired NFL linebacker Dhani Makalani Jones, who played four seasons with the New York Giants and has since taken part in several business ventures, is an RHC investor who will serve on the advisory board.
Bell told the Atlanta Journal-Constitution that the Atlanta-based group of Black investors wanted to establish Redemption Bank to help promote wealth generation. “This system has offered no grace and no mercy for Black people in our country,” Bell was quoted as stating. “We think that having a bank called Redemption, where grace and mercy will be bountiful for people who need it, is important.”
Black-owned financial institutions have been declining in the last few years: Between 2001 and 2018, the number of Black-owned banks in the U.S. decreased by more than 50%, the Urban Institute, a nonprofit research organization, reported. Last year, the Federal Deposit Insurance Corporation (FDIC) counted only 16 Black-owned banks in the U.S. RHC would boost that number to 17.
It’s a problem that organizations like the National Black Bank Foundation (NBBF), which Bell and Dr. King established in 2020, have been formed to address, because when financial institutions are owned by Blacks, it benefits the community.
“Black-owned banks focus their lending on small businesses, nonprofits (e.g., churches), and Black homebuyers,” the Urban Institute’s report said. “They have always maintained their focus on predominantly Black communities, increasing their mortgage lending to these communities and to Black borrowers during the housing crisis, while other institutions backed off. These banks are willing to serve their communities and generally lend in greater shares to moderate- and low-income communities in ways that may protect diversity in these neighborhoods.”
Another financial service coming on offer this year will be for members of the African American sorority Alpha Kappa Alpha (AKA), Inc. The AKAs opened a For Members Only (FMO) Federal Credit Union, it was announced on Feb. 3.
The AKAs––the oldest Greek-lettered organization established by African American college-educated women––were granted a federal charter from the National Credit Union Administration (NCUA). Their new FMO Federal Credit Union will offer share accounts, share draft accounts, online banking, direct deposit, debit cards, and personal loans to sorority members, their families, and AKA employees who open accounts. In press releases, the sorority has claimed a membership of “355,000 members in 1,061 graduate and undergraduate chapters in the United States, the U.S. Virgin Islands, the Bahamas, Bermuda, Canada, Dubai, Germany, Japan, Liberia, South Africa, and South Korea.”
Establishing the FMO Federal Credit Union is one segment of the sorority’s 2022 through 2026 target initiatives. It falls under their “Build Our Economic Wealth” plan, which calls for “launching our most progressive and revolutionary economic initiatives this century.” The sorority said it “will further encourage and equip our members to place key strategies into action to build personal, organizational, and community economic wealth.”
NCUA Chairperson Todd M. Harper said in a statement: “This charter is…in keeping with AKA’s current initiatives to assist members in building economic wealth, promote social justice, and uplift communities, all of which are fundamental to the statutory mission of credit unions. Congratulations to AKA’s leadership for bringing this effort to fruition. I look forward to watching their credit union grow and thrive.”