Two Black banks have merged to become the first Black-led bank in America with over $1 billion in assets, giving them greater scale to finance housing and entrepreneurship in urban areas.
Los Angeles-based Broadway Federal Bank will combine with Washington, D.C.-based City First Bank, establishing the country’s largest Black-controlled bank. The combined entity will have about $850 million in deposits.
Brian E. Argrett, chief executive of City First, will be CEO of the combined company. Wayne-Kent A. Bradshaw, Broadway’s CEO, will be chairman of the new entity’s nine-member board. City First board chair Marie C. Johns, former deputy administrator of the U.S. Small Business Administration under former President Barack Obama, was appointed lead independent director.
“The combination will allow our collective institution to focus its lending capacity in three key areas: multifamily housing, small-business finance, and nonprofit finance,” which can help low- and moderate-income areas, Argrett told Bloomberg. “If you are providing financing for a small business, you are enabling wealth creation, job creation, and economic empowerment through that financing. There’s a multiplier.”
The merged entity plans to keep its Community Development Financial Institution status, requiring it to deploy at least 60% of its lending into low- to moderate-income communities. CDFIs help close funding gaps, create jobs, expand social services, and spur equitable economic development in vulnerable communities. Since 2015, City First Bank and Broadway Federal Bank collectively deployed more than $1.1 billion combined in loans and investments in their communities as of June 30, theinstitutions reported.
The deal comes as many Black-owned banks in America are facing tough operating conditions and need major support to survive. The most recent Federal Deposit Insurance Corp. data shows there are just 20 Black banks in America as of the second quarter of 2020. There was a whopping 48 in 2001.
Community banks have stood out recently in dealing with the economic shocks of COVID-19 and amid national protests that were largely spurred by the police killing of George Floyd.
“Given the compounding factors of a global pandemic, unprecedented unemployment and social unrest resulting from centuries of inequities, the work of CDFIs has never been more urgent and necessary,” Argrett, stated. “As part of this historic merger, we are demonstrating that thriving urban neighborhoods are viable markets that require a dedicated focus, long-term commitment, and critical access to capital.”
The new institution reported it will keep bi-coastal headquarters, keep a major presence in Southern California and Washington, and will continue to serve and expand in the banks’ current geographic areas, with a desire to scale to other high-potential urban markets. It also hopes to become an attractive platform for impact investors looking to join this space.