Redemption opens as nation’s newest Black-owned bank

For the first time, Black investors have purchased a non-minority-owned bank and completed its conversion into a Black-owned bank.

Redemption Bank announced its launch on Thursday after its parent company, Redemption Holding Company, completed the acquisition of Holladay Bank & Trust in Holladay, Utah. The deal had been announced in February 2023, pending regulatory approval. The deal closed on Monday.

The deal’s closing was announced on Juneteenth, a federal holliday commemorating the end of slavery in the U.S. 

Redemption Bank aims to expand access to capital for people of color and help close the racial wealth gap, according to Ashley Bell, who is the chair of the bank’s board and the CEO of its parent company, Redemption Holding Company.

“The name ‘Redemption’ sits with the reality that for far too many times in our country, people don’t have the best connotation with financial institutions and fairness. Those two terms are rarely used in the same sentence,” Bell told American Banker.

Bell said Redemption Bank aims to live up to its namesake by being “a bank that is known for being more than fair, but also interested in the solution — making what’s necessary to build opportunity in these marginalized communities.”

Starting small, aiming huge

Holladay Bank & Trust, founded in 1974, held about $66 million in total assets and $54 million in total deposits as of April 30, according to a call report from the Federal Financial Institutions Examination Council, making the newly formed Redemption Bank one of the smallest Black-owned banks in the U.S.

However, Bell has designs for major growth over the next 10 years, starting in the first quarter by expanding the brick-and-mortar bank into a national, digital brand.

Redemption plans to operate as a “fully tech-enabled, concierge platform” nationwide, according to a previous press release. Bell envisions Redemption becoming “the most innovative community bank in America.”

Ally Bank, a digital bank headquartered in Sandy, Utah, is Redemption’s largest financial institution investor, according to Bell. Ally will act as a “mentor bank” for Redemption’s digital strategy, and Redemption will benefit from getting to “lean on them and having their support through this process,” Bell said.

Bell said the long-term goal for Redemption is to become a publicly traded bank, giving a Black-founded institution “a place on the big board” of Wall Street.

“We see that the marketplace could benefit from having a minority-owned version of Ally,” he added. Ally has $155 billion in deposits and $182 billion in total assets, as of April 29.

Gary Brantley, an investor in Redemption and the chief information officer of the National Football League, sees this long-term goal as deeply symbolic.

“It would signal the rise of a Black-founded institution to a place of national visibility and economic power,” Brantley told American Banker.

Brandon Comer is a partner at Alterity Capital, a private equity firm focused on investing into lower middle market companies, especially sports leagues and teams. Comer invested his personal funds in Redemption.

Comer said Redemption achieving these goals would demonstrate that “we can build a financial institution that’s built on inclusiveness, that’s built on allyship, and that a value-centered organization can also be extremely profitable.”

Strategic location to back a national vision

Redemption Bank will remain headquartered in Utah, where only 2% of the population is Black. Redemption’s leadership have signaled that Utah’s racial demographics are far less important than the strategic advantages to being in what they see as a business-friendly state.

“Utah offers one of the most innovation-friendly regulatory environments for financial institutions, particularly for digital banking models like ours,” Brantley said.

Bell echoed this, saying, “Utah is to banking what Delaware is to corporations. It’s the place you want to be if you’re going to do banking, especially if you know that technology is going to be a critical piece of your structure.”

Jatali Bellanton, a Redemption investor who is also a neuropsychologist and founder of two financial literacy nonprofits, said the Utah location as a reminder “that Black-founded institutions belong anywhere excellence and vision lead them.”

A business-forward strategy for impact

Redemption Bank will focus heavily on small business lending, notably housing a full in-house Small Business Administration lending team, according to Bell, who said this would be unique among Black-owned banks.

Bell said this internal capacity will allow for quicker loan processing and better underwriting, addressing a critical need for minority-owned businesses.

Beyond SBA loans, Redemption aims to facilitate syndicated lending opportunities, particularly in the sports and entertainment sectors, and offer mortgage origination in partnership with national lending institutions.

Bell previously co-founded Ready Life, a fintech focused on cashflow-based mortgage underwriting for those without traditional credit scores. Ready Life and Redemption Bank will operate in different lanes, with no initial tie-in, he said.

Redemption Bank’s backers said they will measure its success by its ability to increase access to credit and other financial services, leading to greater homeownership and entrepreneurship within underserved communities. Bellanton said she plans to track how many “underserved individuals and businesses gain the tools to build credit, buy homes or launch companies,” and she wants to see customers “grow intergenerational wealth.”

Historical challenges for Black-owned banks

Redemption’s acquisition of Holladay follows a trend of decline for the Black-owned banking sector, according to Bell.

“We only have 20 Black banks today when we had over 130 the day that my [co-founder’s] father was assassinated,” Bell said on the American Banker Podcast in 2023. His co-founder is Bernice King, the youngest child of civil rights leaders Martin Luther King Jr. and Coretta Scott King.

“That decline is drastic. And it’s really because those banks are so fragile. Every time America has a downturn, African Americans are the first to get fired,” Bell said.

Indeed, Bell’s mother’s family lost their bank during a downturn in the late 1970s. It had operated the town of Byron, Georgia.

Bell said he believes that by offering community-centered and technologically advanced services, Redemption Bank will attract diverse entrepreneurs who prioritize effective banking solutions over a bank’s racial identity.

What Redemption stands for

Redemption’s investors want to do more than build a bank. They want to send a message to the financial industry.

“Innovation, inclusion and impact can and should coexist,” Brantley said.

Bellanton concurred, saying, “Inclusion is not a compromise. It’s a competitive edge. That the future of banking lies in trust, technology, and cultural competence.”