Urban Trust Bank, the Bethesda financial firm formed by Black Entertainment Television founder Robert L. Johnson, has struck a deal with Wal-Mart Stores to lease space for branches in the giant retailer's outlets in large cities.
Dwight L. Bush, chief executive officer of Urban Trust, said at least one bank would open before the end of the year. Other locations have yet to be nailed down.
The deal marks a significant step forward for a bank that's less than a year old and has just two branches but with an ambition to forge a national franchise.
The Wal-Mart agreement will allow Urban Trust "to develop our brand on an accelerated basis," Bush said yesterday, adding that the retailer's customers and employees are demographically close to Urban Trust's target market - people who may not be customers of large, traditional banks.
Urban Trust's goal, he said, is to reach "places in urban communities in which people do not fully participate in the prosperity of the country," helping with home mortgages, establishing credit, starting small businesses and obtaining student loans.
The bank plans to be "in or close to the 20 largest urban communities in the country in three to seven years," Bush said.
Baltimore, Bush said, "is the kind of market we'll look closely at."
Urban Trust was formed in March, when Johnson, who has interests ranging from hotels to professional sports, bought a struggling, single-location minority institution, Metro Bank of Orlando, Fla.
Renamed Urban Trust, it opened a second office last fall, in Washington's central business district. It also launched, with a minority investment from Goldman Sachs, a student loan arm called UTB Education Finance LLC.
Johnson told the trade publication American Banker in an interview published in November that he views it as "a license or an imperative" to open branches in urban areas across the country.
Bush said the D.C. branch is a "prototype" for future branches with "more of a retail feel," without marble columns and with "no Plexiglas, no barriers between my tellers and the people we are serving."
The number and location of the Urban Trust banks in Wal-Marts "is still being worked out," said Kevin Gardner, senior manager of corporate communications for Wal-Mart.
Leasing space to a bank is nothing new for Wal-Mart. It already has leases with more than 300 financial institutions, he said.
Gardner said the Urban Trust agreement had "nothing whatsoever" to do with Wal-Mart's application to federal bank regulators for a license, now on hold. Small banks opposed the license, saying Wal-Mart would put them out of business.
Gardner said Wal-Mart did not intend to compete with banks, but was seeking a license so it could offer credit and debit cards.
In fact, he said, the Urban Trust deal is "evidence we're not getting into consumer banking, because we're leasing space to consumer banks."
Wal-Mart Stores says it has applied for a banking license to save on processing fees for consumers using debit and credit cards, regardless of the card's sponsor. An article in Saturday's editions of The Sun said that Wal-Mart was seeking the license so it could offer credit and debit cards; it in fact has offered branded credit cards for years. THE SUN REGRETS THE ERROR