DELLWOOD — On a sunny September morning last year, hundreds of people gathered in the parking lot of a strip mall that sat vacant for years.
The crowd was eager for the official opening of the R&R Marketplace, which finally filled the space with a host of services designed to boost economic access in and around the small north St. Louis County municipality.
One of those was a new branch from Midwest BankCentre. At the time, bank Chairman and CEO Orvin Kimbrough noted the financial landscape his organization had chosen to move into.
There were dozens of payday loan establishments within five miles, he said.
“There’s one right there within eyesight of me,” Kimbrough said, gesturing from the podium he was speaking from. “One of our objectives of opening up this facility … we want to put them out of business.”
Cheers erupted from the crowd at that declaration.
But more than a year later, Kimbrough admits those payday lending facilities haven’t been easy to disrupt because, while predatory, they do serve a specific need within a market.
“You can’t talk about displacing those facilities without replacing [them] with something that would meet that particular need,” he said. “It’s very difficult for traditional financial institutions, like banks, to compete in that space and be profitable.”
Kimbrough said his bank is trying to figure it out though, even launching an alternative product to compete with payday loans. But that initial product had to be scrapped because there were too many losses from people who didn’t pay back their loans, he said.
Midwest BankCentre is revamping it and has plans to start offering it again soon, Kimbrough said.
“We have to do a better job as a financial services institution of helping create the conditions for people to understand,” he said. “We’re not going to charge you these super expensive rates. We need to be in [a] relationship with you and we expect payback.”
The new branch in Dellwood, which Kimbrough said is the bank’s “innovation center,” is a prime location for experimentation to determine how to forge stronger ties with communities in St. Louis or elsewhere that haven’t always had strong relationships with banks.
In addition to Midwest BankCentre’s branch in Dellwood, the Urban League of Metropolitan St. Louis announced this summer it will include a bank in a new $10 million business plaza that broke ground on West Florissant Avenue in August.
Education as a foundation
One of the critical first steps to a lasting banking connection is education, said Ashley O’Neal, Midwest BankCentre’s senior vice president of retail banking. It’s about helping people feel comfortable asking financial questions and providing tools for how to evaluate a decision about money, she said.
“I don’t want anyone to feel threatened by having a banking relationship,” O’Neal said. “For some, they may have had bad interactions with institutions in the past, may have even made some mistakes. But we have an opportunity to help start over and be on the right path moving forward.”
In practice inside the Dellwood Branch, this looks and sounds like normal banking interactions that happen every day. Like the one involving Montrese Gardner, who needed help making a deposit in her checking account.
She was worried she’d get hit with an overdraft fee after a loan charge posted to her account a few days earlier than it normally does.
“They’ve never done it before, and I’ve been paying them over a year,” Gardner explained to O’Neal, who then advised Gardner to contact the company to find out why the debit posted early before helping her make the deposit.
“If you get an overdraft fee, I will take care of that and reverse it back to the account,” O’Neal said, handing Gardner a business card in case she had further questions.
Gardner, who’s banked with Midwest Bank Center for more than five years, said she appreciates now having a banking location just a few minutes from home.
“It saved the drive of going all the way to the city on Martin Luther King,” she said. “It’s very convenient. I stopped class and said, ‘Let me go handle this.’”
After Gardner leaves, O’Neal goes to help Lenzell Green who has come in with a range of questions about different financial products: auto loans, personal loans, credit cards. They chat for about a half-hour about the various loans and credit options and how they work.
“I just like to see what my options are, especially with my money,” Green said. “That’s one thing I don’t play about.”
Green didn’t take out a loan that day, but that doesn’t bother O’Neal. It’s more about doing what’s right for the customer, she said.
“The education piece is the biggest thing for us,” she said. “The deposits, they come, the lending opportunities, they also present themselves.”
‘I’m the person that needs help’
That was true of Cathy and Jerome Jenkins, who own and run Cathy’s Kitchen in Ferguson and had been searching for a way to alleviate the order volume, particularly from deliveries and takeout, that was overloading their restaurant on South Florissant Road.
“We knew we needed a to-go restaurant to solve that problem,” Cathy Jenkins said.
They had been considering this kind of expansion since the beginning of 2023 before opening Cathy’s Kitchen To-Go in Dellwood, which is next to Midwest BankCentre’s new location.
It was serendipitous and made sense to reach out since they’d be in the same complex, Jerome Jenkins said.
“This was an opportunity because Midwest Bank[Centre] was looking for someone to help,” he said. “Now it’s just nice to be one of the first people to knock on the door, to go, ‘Hey, it’s me. I’m the person that needs help.’”
They spent months negotiating with the bank before agreeing to a $100,000 loan to help with the roughly $185,000 buildout cost, Jenkins said. He added they were committed to a second restaurant location regardless of where they’d find the financing.
“There’s a lot of ways that you can get capital, but this project was about the community,” Jenkins said. “Midwest Bank[Centre] was trying to figure out what to do for the community.”
Securing financing in this manner was new territory for both of the Jenkinses.
“We didn’t get a loan at all for the original Cathy’s Kitchen,” Cathy Jenkins said. “We used our own cash, and we built it dollar by dollar, and a lot of blessings and miracles along the way.”
It’s an all-too-common experience for many Black-owned ventures, said Andre Perry, who directs the Center of Community Uplift at the Brookings Institution.
“There are many Black-owned businesses that had to self-finance,” he said. “They use credit cards, [sell] their home, try to use equity in their home.”
‘It has to be profitable’
Banks can be the institutions that provide that capital and help sustain the communities they’re located in over years and decades, Perry said. They do this by holding deposits and using that capital to make loans or investments in the surrounding community, he said.
“That’s the dilemma with Black communities,” he said. “If you don’t have as many high net-worth individuals in a location, you’re going to have less capital in that bank to ultimately use as investment capital.”
This reality is articulated when examining deposit data from the Federal Deposit Insurance Corp. As of June, banks in the St. Louis region managed some $130 billion in deposits, but only about 3.5% of that dollar figure was in locations in north St. Louis or north St. Louis County.
For comparison, about 17% of the region's nearly 2.8 million population lives in north St. Louis and north St. Louis County.
The strained banking relationship goes both ways.
“A lot of times in the African American community, we don’t trust banks,” Jerome Jenkins said. “Most people never ask, they never get that far to even reach their hand out because they already perceive they’re not going to get money for financing anything.”
Perry added that many bankers are more physically distant from individuals in the communities they serve because of bank consolidation over the past 20 to 30 years.
“If you’re only working with numbers, you may not get a sense of who that person is,” he said. “In addition, you may not pick up when someone has not received intergenerational wealth transfers because of past discrimination, so their application looks very different from someone who did.”
Perry argues that the relationship between banks and the neighborhoods they reside in is reciprocal and that they will grow as the community does. But this takes time and patience that some banks don’t have, he added.
“Many Black and brown communities just need more time in order for these services to get traction,” Perry said. “It doesn’t help at all if you say, ‘Oh, let’s pull out the bank because it’s not profitable today.’”
It’s a sentiment Kimbrough shares and one of the driving philosophies behind Midwest BankCentre’s decision to open in Dellwood, even down to how the bank built out the location. A new branch can cost between $2.5 million and $5 million depending on a few factors, but the bank managed to build the Dellwood location at 10% of that figure, he said.
“Let’s see how we can shift the cost structure because we want to be sustainable for this community and this part of the region,” Kimbrough said. “Oftentimes when [banks] think about low-to-moderate income communities, we put them in the charitable bucket. We show up and we do all things charity.”
Philanthropic actions are important but not everything, he said. Kimbrough doesn’t mince words when he explains the decision to open a new branch in Dellwood is just good business.
“I’m not on this because it’s a social crusade,” he said. “This is an investment. In fact, for any bank to be sustainable in any community, it has to be profitable. And you can’t be apologetic about that.”
Kimbrough concedes the Dellwood location isn’t profitable yet, but he didn’t expect it would be for another few years. He said he’s convinced there is money to be made while helping community members reimagine how they can engage with financial institutions moving forward.
