How Twin Cities banking executives helped the state's first Black-owned bank come to town

At the grand opening last week of Minnesota's first Black-owned bank, CEO Kenneth Kelly offered some of the usual superlatives.

"It is absolutely amazing what you're seeing today," Kelly said, looking out at more than 100 elected officials, community leaders and others outside the First Independence Bank branch on University Avenue in Minneapolis. "This is beyond anything we dreamed about."

Then he did something unusual. He asked the leaders of five competing banks to stand beside him. "Don't be shy," he nudged them.

One by one, top executives from Bank of America, Bremer Bank, Huntington Bank, U.S. Bank and Wells Fargo joined him at the front.

"I want the world, I want the Twin Cities, I want Minneapolis to see what can happen when individuals decide that they want to make a difference," he said.

Over the last year and a half, the five executives met regularly with Kelly, sometimes as often as once a week, to help him expand Detroit-based First Independence to the Twin Cities. They showered him and his bank with financial, logistical and technical support.

In the process, they helped him pull off something that is fairly rare for Black-owned banks. Over the last couple of decades, the story of these institutions has more often been one of closing doors than expanding to new markets.

There were once more than 100 Black-owned banks in the U.S. But historically undercapitalized, their numbers have been dwindling in a competitive industry with rising costs that has seen waves of mergers. Today, just 16 of the nation's approximately 4,000 banks are Black-owned.

With a little more than $400 million assets, First Independence has been a fixture in Detroit for more than five decades. It was founded after riots that erupted after a police action in that city in 1967.

Fifty-three years later, it was the murder of George Floyd — and the civil unrest and racial reckoning that ensued — that sparked the series of events that led to First Independence's arrival in Minneapolis.

In the wake of Floyd's death, the five Twin Cities bank executives came together to discuss how they could make a bigger dent in reducing the region's glaring racial disparities in areas such as wealth and homeownership.

Each bank had already announced a number of their own racial equity initiatives, including millions of dollars in loans for minority-owned businesses.

"But we said, 'What more could we all do collectively?'" said Laurie Nordquist, who was then regional president for Wells Fargo and is now recently retired.

As they brainstormed ideas, they zeroed in on the lack of a Black-owned bank in the Twin Cities.

"We realized that in order for us to bridge the racial wealth gap, it would be better to have a Black-owned bank in our community in addition to all the rest of us," said Tim Welsh, vice chair of consumer and business banking at U.S. Bancorp. "For a lot of historical reasons, many in the Black community don't have as much trust in traditional financial institutions as we would like."

Mike Jones, who leads the Minnesota market for Huntington, mentioned that he knew Kelly from doing business with him in Detroit. When Kelly met the Twin Cities bankers, he told them he'd wanted to expand First Independence outside of Detroit for several years.

The Twin Cities group realized, Jones said, that "we could move more quickly to get his bank established here in the Twin Cities."

Jeanne Crain, CEO of Bremer Bank, said they were impressed with Kelly's leadership and the bank's track record. "It seemed like a perfect fit," she said.

The Twin Cities wasn't on First Independence's list of potential markets until 2020, and really took off when the Minnesota bankers approached him, Kelly said in an interview.

But as a relatively small bank with limited resources, Kelly knew he would need help to expand to Minneapolis. So the five bankers agreed to sell First Independence $200 million in loans to ensure it would have an immediate source of revenue.

In addition, Wells Fargo and Bank of America made equity investments and First Independence raised another $20 million from other investors.

The banks opened other doors, too. All five banks, in addition to a couple of others, are now waiving surcharges for First Independence customers to use their networks of ATMs around town, giving them better access to cash.

Nordquist offered a recently shuttered Wells Fargo branch for First Independence's first location on University Avenue. It had a drive-through and was close to the light rail and St. Paul. And it was already outfitted as a bank so it didn't need much work to get it back up and running.

Wells Fargo donated the building to the Project for Pride in Living, a nonprofit organization, which is leasing it to First Independence at an affordable rate.

The bankers also suggested that Kelly tap Damon Jenkins, a Twin Cities-based district manager who has worked for both Wells Fargo and U.S. Bank, to lead First Independence's Minneapolis operations.

"It's not always easy to give some of your best talent to someone else, but it was so important for the success of getting this Black-owned bank here to have someone who really knew the community, knew it well, and knew banking," Nordquist said.

Black-owned banks can be a "significant provider" of mortgages and small-business loans for people of color, said Nicole Elam, president of the National Bankers Association, which represents Black-owned banks.

"They are often saying yes when others are saying no," she said.

For First Independence, increasing homeownership among Black residents will be a big focus in the Twin Cities, Kelly said, as the region has one of the worst racial disparities in the nation in that realm.

First Independence will have a counselor from the nonprofit Operation Hope on site at its branch two days a week to help coach people on improving their credit.

In the last few months, Jenkins has also been reaching out to nonprofits and other community groups about potential partnerships for first-time homeowner programs and financial-education classes.

A second First Independence branch in Minneapolis is slated to open in June at Lake Street and Hiawatha Avenue.