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The largest Black-Led (but not Black-owned) bank in the U.S.


Black-Owned Broadway Financial Corporation and “Black-Led” CFBanc Corporation announced a merger of equals that may lead to the creation of the largest Black-led (but not Black-owned) bank in the U.S. The resulting institution will have more than $1 billion in combined assets and approximately $850 million in total depository institution assets (as of June 30, 2020).

(Also see: BLACK BANKS MERGE TO CREATE NATION’S FIRST BLACK-LED BANK WITH OVER $1 BILLION IN ASSETS. https://www.blackenterprise.com/black-banks-merge-to-create-nations-first-black-led-bank-with-over-1-billion-in-assets/

Black-Owned Banks in LA, DC Announce Merger.
https://mynewsla.com/business/2020/08/27/two-black-banks-merge/

Merger of two Black-led banks aims to help break a painful cycle https://www.latimes.com/business/story/2020-08-27/black-banks-broadway-federal-bank-city-first-merger )

Broadway is one of the best Black banking institutions in the US, based on their longevity and positive impact on Black homeownership in the Los Angeles area.

The fact that the new institution will have a presence on both coasts is positive. It means the resulting bank will be able to present itself as having an impact in multiple geographies. This will allow it to get assistance from majority-owned banks on both coasts.

A number of questions remain:

Black-Led versus a Black-Owned. Being Black-owned implies a higher degree of control, and, thus, a higher level of concern for Black economic interests. As a Black-led, but not Black-owned financial institution, how well the partnership with CFBanc actually reflects Black economic interests remains to be seen.  In 2002, the Federal Deposit Insurance Corp. expanded the definitions of what constitutes a "minority bank" claiming the old definition "ambiguous." Now a bank that does not meet the ownership test can be designated an MDI (minority depository institution) if 51% or more of the directors on the board are members of those minority groups and the community the bank serves is primarily minority. This change did not lead to an increase in lending to the Black community on the part of Black banks. (See: https://www.americanbanker.com/opinion/minority-bank-designation-has-become-meaningless and https://www.blackenterprise.com/executives-working-to-create-black-owned-holding-company/)

Attitude and flexibility of the bank’s main regulator, the Office of the Comptroller of the Currency (OCC). In addition, the bank will be listed on the Nasdaq. Will it be allowed use this platform to raise significantly more capital?

Impact Investors? With Community Development Financial Institution (CDFI), Minority Depository Institution (MDI) and Benefit Corporation designations, the bank is positioned to take advantage of funding from impact investors to Black firms. How well the firm will use these designations and any resources that come about because of them is another question. The ability of the resulting institution to actually increase their commercial lending as opposed to simply increasing “capacity” will be critical.

Other transactions? The financial advisors are Keefe, Bruyette & Woods and  Raymond James & Associates, Inc.  Mega white shoe law firms Arnold & Porter Kaye Scholer LLP and Covington & Burling LLP are serving as legal counsel to the parties. These firms are the major financial institution transaction advisors in the US. They are also very expensive. We suspect they are engaged as part of their contributions to Black Lives Matter. This implies there may be other Black bank transactions in the works.

Cooperation and collaboration across ethnic lines. This crisis may force us to the realization, finally and literally, that we must "live together as brothers or perish together as fools." What would be of more impact and relevance would be cross ethnic group (Black and Asian, Black and Hispanic) mergers and cooperative agreements.

The one positive impact of centuries of racism may be to have exposed massive opportunities for cooperation and collaboration across ethnic lines. 

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