City First-Broadway Deal Will Create Biggest Black-Led U.S. Bank
City First-Broadway Deal Will Create Biggest Black-Led U.S. Bank
(Bloomberg) -- City First Bank of D.C. in Washington and Los Angeles-based Broadway Federal Bank agreed to merge, creating the biggest Black-led bank in the U.S.
The yet-to-be-named company will focus on commercial lending that aims to advance economic and social equity in underserved communities, the banks said Wednesday in a statement. The firms have a combined $1 billion in assets under management and about $850 million in deposits.
City First Bank Chief Executive Officer Brian Argrett was named CEO of the merged firm, while Broadway CEO Wayne-Kent Bradshaw will become chair of its nine-member board. City First board chair Marie Johns 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 said in a phone interview. “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.”
While Wall Street behemoths may be too big to fail, many Black-owned banks have proven too small to succeed. Two decades ago, 48 were open for business. Today, there are just 18. Rapper and activist Michael Render, also known as Killer Mike, is one of the biggest advocates for the #BankBlack movement, which calls on Americans to bolster lenders in underserved areas.
After George Floyd’s killing by police in Minneapolis sparked a national reckoning over race, Black-owned banks such as OneUnited saw a surge in deposits. Netflix Inc. pledged to shift as much as $100 million to lenders that support African-American communities.
The merged City First and Broadway company will be better able to operate on a larger scale, resist margin pressure and boost lending in the areas that need it most, Argrett said.
“We are stepping in at an important time, in an important space,” he said. “With the public-health crisis, disparities in social and financial outcomes, and, quite frankly, with the social unrest that is occurring around our country as a result of those disparities, it also makes this transaction more important.”
Broadway Financial Corp. shares gained 13% to $1.77 Wednesday in New York trading, and are up about 15% this year.
The deal is scheduled to close in the first quarter, subject to regulatory approval.
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