City First Bank in Washington, D.C., and Los Angeles-based Broadway Federal Bank announced a merger Wednesday that would create the nation's largest Black-led bank with more than $850 million in deposits and $1 billion in assets.
The deal between the two community development financial institutions (CDFIs) is expected to close in the first quarter of 2021. The combined institution will maintain bicoastal headquarters, as well as its CDFI status, which requires it to deploy at least 60% of its lending into low- to moderate-income communities.
The banks said the merger will increase their commercial lending capacity for investments in multifamily affordable housing, small businesses and nonprofit development in financially underserved urban areas.
Under the terms of the deal, which was approved by both boards of directors, Broadway Federal stockholders will own 52.5% and City First Bank shareholders will own 47.5% of the combined institution, the banks said.
The merged entity will continue serving the banks' current geographic areas, with a desire to scale to other urban markets, the banks said.
"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," Brian Argrett, president and CEO of City First Bank, said in a statement.
Argrett will become vice chair and CEO of the combined institution.
"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," he said.
Argrett hopes the merged bank, which will be renamed, will have "two-and-a-half times more lending capacity for any one customer," he told the Washington Business Journal.
"In a high-cost market like D.C., that means we have an even greater lending capacity to serve our customers and enhance our community," Argrett said.
Broadway CEO Wayne-Kent Bradshaw will serve as chairman of the combined company, the banks said.
The new institution will preserve Broadway Federal's designation as a minority depository institution (MDI), a federally insured entity that is mostly owned by minority individuals, or whose board of directors is mostly made up of minorities, according to The New York Times.
Of the 143 MDIs in the U.S., only 20 are Black-led, according to the Federal Deposit Insurance Corp. (FDIC).