The Twin Cities area doesn't have a Black-owned bank, but it soon will.
Detroit-based First Independence Bank, one of about 18 Black-owned banks in the U.S., is planning to open its first branch in Minneapolis in early November, to be followed by a second next year.
"This is going to be a historic move," said Kenneth Kelly, chairman and CEO of First Independence. "This is the first time we have ventured outside of the Detroit area."
It was encouraged to come to the Twin Cities by the region's biggest banks — U.S. Bank, Wells Fargo, Huntington Bank (formerly TCF), Bremer Bank and Bank of America. They are offering financial, technical, consulting and marketing support to First Independence.
Those banks announced millions of dollars in equity initiatives following the police slaying of George Floyd last year. Around the same time, bank executives started talking to each other about how they could work together to reduce the region's huge racial wealth gap, leading to the unusual step of inviting another competitor to the market.
"Some people in the Black community don't always trust banks," said Tim Welsh, vice chairman of consumer and business banking at U.S. Bank. "We can all go back in history and imagine why that's the case. But a Black-owned bank is a place that can bridge that trust gap."
He added that the five banks will continue to commit resources and efforts individually.
"We as the banks all view ourselves as eager to address these issues and are working hard on it, but realize if we create an ecosystem together of lots of different kinds of institutions, we're more likely to be able to be successful in addressing this overall gap," Welsh said.
Black and other minority customers experience and sense differences in treatment in all types of business and service situations, Kelly said. Data about financial services show some of the disparities that have resulted.
"When you send someone who looks like me into the store and you send someone who doesn't look me, you basically get differences in outcomes," Kelly said. "It's not anyone's intention to do that, but the reality is the results always reflect that."
Another effort is underway in Minneapolis to start a Black-led financial institution, a credit union called Village Financial Cooperative. That effort began after the 2016 police shooting of Philando Castile, but it sputtered in 2019 amid allegations of mismanagement.
The organization behind that effort, called the Association for Black Economic Power (ABEP), has brought on new staff and board members and is now seeking $6 million from the city of Minneapolis to help launch the credit union.
U.S. Bank has reached out to that group, too, and will look for ways to support it, Welsh said.
"I think there is plenty of room for First Independence," said Debra Hurston, ABEP's executive director. "I think the addition to the market would be good for the community in general."
The Twin Cities has long grappled with disparities in wealth by race. Only about 21% of Black residents in Hennepin and Ramsey counties own a home compared to 70% of white residents, according to a recent report.
Bremer Bank CEO Jeanne Crain said there was a turning point in the local banking community after the Floyd murder. "There was this recognition that we just couldn't keep doing what we were doing," she said.
While the major banks continue trying to serve Black Minnesotans and other people of color better, Crain said that attracting a Black-owned bank to the market amounts to "trying to move that needle more quickly."
Laurie Nordquist, the Twin Cities-based president of the central region for Wells Fargo, noted that Black residents of the Twin Cities are five times more likely to not use banks than white residents.
"With a gap that big, I think we all need to lean in," she said.
First Independence was established in 1970 in Detroit following riots in that city a few years earlier. Today, it has two branches and is the seventh-largest Black-owned commercial bank in the U.S.
Both Wells Fargo and Bank of America have made financial investments in First Independence. U.S. Bank has supported it since 2019 through the Treasury Department's mentor-protege program.
And Huntington Bank, which recently merged with TCF, had already been partnering with the bank in Detroit, where it also has major operations, in areas such as home lending and entrepreneurship.
As conversations progressed for a Minnesota expansion, Kelly said he was heartened by the reception and support he received from Black leaders in the Twin Cities, including Sondra Samuels, CEO of the Northside Achievement Zone, and Paul Williams, CEO of Project for Pride in Living. He added that Samuels and her husband, Don, even invited him over for dinner at their house, which he said has helped him "get his feet on the ground."
Project for Pride in Living is working with First Independence on its first location in Minneapolis — at 3430 University Av. SE., a former Wells Fargo branch that bank is donating to PPL, which in turn is leasing to First Independence.
Kelly said he likes that location because it is close to the border of St. Paul and has a drive-thru. It will also have space to host classes and community gatherings.
For the bank's second Minneapolis location, he's eyeing the intersection of Lake Street and Hiawatha Avenue, the epicenter of last year's protests after the Floyd killing.
First Independence is looking to raise another $10 million in equity capital, mostly from institutional investors, after already raising an initial $10 million to enter this market, Kelly said.
Damon Jenkins, who has worked as a district manager in the Twin Cities for both Wells Fargo and U.S. Bank, has been tapped by First Independence to be its regional president based in Minneapolis.
