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  • Writer's pictureTennessee Diversity Consortium

Why Local Banks Thrive off Community with Jeff McGruder

Jeff McGruder, Chief Relationship Officer for Citizens Savings Bank and Trust, speaks to the importance of supporting local community banks.

With 118 years in business, Citizens Savings Bank and Trust is the oldest continuously operating minority owned and operated bank in the U.S. Jeff McGruder explains why this bank was started due to federal laws at the time that prevented Black people from getting loans to buy houses and increase their wealth.

“As an executive at a black bank, I always want to put out there that our banks are for everybody. But our history has to be told,” McGruder said.

In this episode, McGruder explains some of the history behind discrimination in banking, revealing shocking statistics and illuminating the reality of how much support these local banks require to thrive still today.

Discrimination in Banking

In the 1950s post World War II, McGruder explains how what was known as the GI Bill enabled soldiers to get educated and buy a home, but in order to do so they needed to get a loan approved from their bank. These loans are what essentially created a middle class in America, distributing the wealth, but mainly in White communities. This was due to discrimination from the banks in distributing loans.

“There was nothing in writing that said Black soldiers could not get it. But when they would go to banks who had all the deposits, most of them were White banks, and their applications would be denied,” McGruder said.

This discrimination in loan lending gave way to the massive equity gap that exists today, shown today by the average personal net worth of White people being ten times greater than that of Black people.

Redlining in urban cities across the country at this time also contributed to the wealth gap that exists today. McGruder added that Nashville was no different, seen today in the state of North Nashville, a community that was particularly affected by redlining in the 1940s and 1950s.

Corporate vs. Community Banking

McGruder was a senior at the University of Tennessee, Knoxville playing basketball when he was deciding the next right step to take for his future. After taking a few business classes and enjoying them, he reached out to the career center on campus to explore that option.

“When I saw that I would be learning credit, something in me was like, man, I would love to teach people how to be better stewards with their money,” McGruder said.

After working at Regions Financial Corporation for 13 years, McGruder was recruited to work at Pinnacle bank, and saw firsthand what it was like to work for a smaller bank that really had a direct impact on the local community.

However, Pinnacle bank was large in comparison to Citizens Savings Bank and Trust, and it was there that McGruder learned how relationships create opportunities for ethnic minorities in Nashville. To get ethnic minorities to be bankable, it’s not about only working with their assets to be liquidity providers for everyone else, he said.

“There needs to be this corporate business relationship that minority owned banks have to have at a high level,” McGruder said.

What Banks Need

McGruder explains how the focus for Citizen Bank right now is on corporate relationships, because that is what enables these local banks to create an impact in their communities.

“If you want to make an investment in Nashville, you should have a local community bank relationship,” McGruder said.

He goes on to explain what this looks like in the episode, and how it can be as simple as meeting the CEO of a local bank and asking what their strategic plan is and what you can do to help.

“I think a lot of times people take it for granted that the banks are ok,” McGruder said. “I mean, banks need capital, but they really need the community to embrace them.”

To learn more about the ways you can get involved with the Tennessee Diversity Consortium, visit And be sure to subscribe to Speak Up for Equity wherever you listen to podcasts so you never miss an episode.


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