Citizens Bank: How the legacy of America's oldest Black-owned bank is growing in Nashville

Two stories, two perspectives. Two futures unlocked.

The day Robert Sherrill stepped into freedom, he stepped into a new life. He made a commitment to himself and to his family: He would build something great.

But there were barriers. Sherrill previously spent five years in federal prison for drug possession charges. And there aren’t many professional opportunities for the formerly incarcerated, men and women who are often barred from industries and suffer from employment discrimination.

Michelle Blodgett, meanwhile, was desperate for a loan. Her home mortgage application was denied by several banks who all told her the same thing: Her credit score was too low.

Then, like Sherrill, she reached out to Citizens Bank in North Nashville. In both cases, the financial institution — the oldest continuously operating, Black-owned bank in the U.S. — looked past factors that other banks viewed as deal breakers.

These two Tennesseans illustrate the types of customers Citizens has served for decades: people who are turned away from traditional banks due to poor credit, financial barriers, past indiscretions, racial or ethnic discrimination or some other reason.

"They know me, they know my business. They trust me," said Sherrill, whose commercial banking relationship with Citizens was foundational to the start of his business, a commercial and construction cleaning company based in Madison.

At the core of that mission is bridging the wealth gap between Black and white Americans, while also serving all races.

Blodgett is white.

“Citizens was willing to take a chance on me,” she said.

While it started as a savings bank in 1904, Citizens Bank has loaned money to businesses like Woodcuts Gallery and Framing, now a long-standing and beloved pillar of Jefferson Street in North Nashville.

"We’re here for the individual, business and nonprofit that just doesn’t get the attention," Citizens chief relationship officer Jeff McGruder said. "We are providing capital for people to participate in Nashville’s climb. We’re answering the call."

The bank is now focused on its own growth and rebirth.

After losing millions in 2017, Citizens has worked to alter its course in a span of five years, McGruder said, growing its assets from $97 million to $175 million. It now enjoys brand new investors, a modernized banking system and relationships with the Titans Foundation, the National Black Banks Foundation and others.

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Sherrill’s climb from being incarcerated to owning his own successful business took sacrifice. But he knew it was the only way he could feasibly provide for his family.

In 2019, he was pardoned by then-Tennessee Gov. Bill Haslam, and he received a pardon in 2021 from then-President Donald Trump.

Despit the pardons, Sherrill said discrimination has impacted him twofold as a Black man with a felony on his record.

“It’s been extremely hard, not only to get people to trust me, but to have any type of conversation about access to capital,” he said.

As the founder of Imperial Cleaning Systems, he slowly built the company over several years. It now employs 37 people, working for clients across the state.

He voted for the first time in 2020 — at age 37.

He credits his trusting business relationship with Citizens as a crucial part of his success in scaling his business, but he said more needs to be done to combat discrimination on the basis of felony status and race.

“We need more Black institutions that understand our people and what we’ve been through,” Sherrill said. “We’ve been beat up, chewed up and spit out. It's important that banks like Citizens remain.”

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In order to loan more to disenfranchised communities, McGruder said, Citizens needs to bolster its capital assets in the form of deposits. Those deposits, he added, can and should come from all over Nashville and the state of Tennessee.

Growth of capital deposits in the bank means more lending power for marginalized communities that need home and small business loans. These dollars lift up neighborhoods, street by street.

"There has to be joint-venturing to bridge the racial wealth gap," McGruder said. "Black people can’t pass the dollar around fast enough to catch up a tenfold wealth gap. The white community and the Black community have to put their dollars in the bank so that it can grow."

A rebirth at Citizens Bank in Nashville

Since 2019, Citizens has worked to alter its course dramatically.

The Federal Deposit Insurance Corp. hit the bank with a consent order, requiring it to improve its capital ratios, among other things. Citizens responded by bringing in new leadership, including a new CEO and additional board members. The bank raised $10 million in capital investments, strengthening ties across Nashville in the process.

It's been a steady climb out of the red, and an overhaul of the bank's online and mobile banking systems was necessary to stay competitive and bring in customers from all over the state.

The idea is simple, McGruder said. Citizens aims to make it possible for anyone in the country to open a depository account through online and mobile banking technology. That way, people who believe in Citizen's mission can be a part of it.

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Citizens has the foundations necessary to a mission-driven bank, McGruder said. It's steeped in history, having been around since before desegregation and the Civil Rights Movement.

Black communities were not served equally by mainstream banks during the 20th century, especially when it came to lending practices. Home mortgages and small business loans, among other banking resources, helped white families grow wealth over many generations. Black families turned to nontraditional money services out of necessity.

Data shows there is still a lack of trust between mainstream banks and marginalized communities — specifically Black and Hispanic populations.

According to a 2021 survey by the FDIC, 11.3% of Black households were unbanked — meaning no one in the household had a checking or savings account with a bank or credit union. That's compared to 2.1% of white households.

The most commonly cited reason (40% of respondents) for not having a bank account was not having enough money to meet the minimum requirements, while 33% of respondents said they don't trust banks.

McGruder said Black-owned banks such as Citizens need to work with the Black community to rebuild that trust.

"It’s important for us to get really loud because those communities still feel that hurt and they still feel the mistrust in banking in general," he said "We are regulated and we will take care of your deposits. And you can trust that we will get you the credit you need to build your community."

Strength in numbers: The National Black Bank Foundation

The rebirth of Citizens mirrors work being done in other Black-owned banks across the country. They have reported an increased interest from the general public in recent years — especially since the death of George Floyd and resulting nationwide protests during the summer of 2020.

Many of those banks have prioritized modernizing systems to compete with larger banks. The National Black Bank Foundation assists with that process.

Rod Chavez, executive director of the foundation, said the organization partners with banks on projects such as updating online banking, consolidating debts and improving investment strategies.

"NBBF’s core mission is to help the bank stay in existence, operating as lean and mean as they can," Chavez said. "From our perspective, we want to support and show up and help be the backbone of the banks. We bring in the technical expertise."

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The foundation also works to join banks together to leverage their strengths. One such example was the $25 million deal between Major League Soccer and seven Black-owned banks, gathered together by NBBF. Deals like that provide capital to Black-owned banks which can be loaned out in the form of home and small business loans in Black communities.

"By doing these syndicated transactions, the banks are coming together to do something larger than they could alone," Chavez said.

The latest in that effort for Citizens is the bank's partnership with the Titans Foundation. According to contracts between the two organizations, the Titans Foundation (through their ONE Community program) will deposit up to $2 million in funds specifically for a small business loan program and up to $5 million to power a loan program aimed at qualified housing developers seeking capital.

"The Titans are putting their money where their mouth is," McGruder said.

The partnership between the Titans Foundation and Citizens is an example of the joint-venturing strategy on a larger scale, therefore making capital available to more potential homeowners and entrepreneurs.

“ONE Community was developed in collaboration with local community leaders and residents, reflecting the greatest opportunities to make a significant impact on the Greater Nashville area," said Johari Matthews, executive director of the Titans Foundation. "As a long-standing and trusted local business, Citizens Bank was a natural fit to join this partnership."

Community outreach in the form of financial coaching

One of the barriers Sherrill still sees in the Black community is the lack of access to quality information about personal and professional finances. That's why he founded the DREAM Initiative, a nonprofit working to reduce recidivism through a network of education, resources and guidance.

"It's important that we educate our community about how money works, and I think Citizens is doing a great job at educating their customer base, which is predominantly the African American community," Sherrill said.

Citizens offers that guidance through a partnership with a national nonprofit called Operation HOPE, which provides financial coaching specifically to marginalized communities. Financial wellbeing coach Tonesha Talley works with clients to make their hope of financial freedom into a reality. Her services are free for Citizens customers.

Talley said her approach is rooted in finding the "why" behind someone's spending and savings habits. This helps her understand what barriers exist and create a plan to tackle them with her clients.

The key is consistency — Talley checks in with her clients monthly to make sure they are following through on their plan of action.

Seeing the change in the lives of her clients is what motivates her to continue showing up.

"If I won the lottery tomorrow I would still do this work," Talley said.

This article originally appeared on Nashville Tennessean: Citizens Bank aims to bridge the racial wealth gap with joint ventures