Wells Fargo announced equity investments in six Black-owned banks Monday, a move it says is connected to a $50 million pledge it made last year to support minority-focused financial institutions.
The bank, which didn't reveal the amount put toward each institution, said the capital investment includes access to financial, technological and product development expertise "to help each institution grow and benefit their local community."
Wells Fargo's investments come as a number of major banks have committed capital to minority depository institutions (MDIs) and social justice efforts in the wake of last year's racial reckoning sparked by the killing of George Floyd.
The six banks that received equity from Wells Fargo are Broadway Federal Bank in Los Angeles; Carver Federal Savings Bank in New York City; Citizens Savings Bank & Trust in Nashville, Tennessee; Commonwealth National Bank in Mobile, Alabama; M&F Bank in Durham, North Carolina; and Optus Bank, in Columbia, South Carolina.
Broadway Federal Bank announced in August it would merge with Washington, D.C.-based City First Bank, a combination that would create the nation's largest Black-led bank with more than $850 million in deposits and $1 billion in assets. Wells Fargo said its investment in Broadway will close upon completion of the merger, which is expected to finalize this year.
"These investments are designed to help the banks become stronger and more impactful to the minority communities they serve, which leads to economic revitalization and job opportunities," Bill Daley, vice chairman of public affairs at Wells Fargo, said in a statement. "So many communities have suffered over the past year. MDIs need capital, but they can also benefit from access to other resources, and Wells Fargo is committed to building lasting, strategic relationships with these institutions in support of their goals."
Of the 143 MDIs in the U.S., only 20 are Black-led, according to data published in September by the Federal Deposit Insurance Corp. (FDIC).
Wells Fargo has stepped up its internal diversity efforts over the past months, as well.
The bank hired former Capital One executive Kleber Santos in November to head a new group overseeing diverse segments, representation and inclusion.
Santos's appointment came as the bank's diversity initiatives had been questioned by the Labor Department, and followed a September apology from Wells Fargo CEO Charlie Scharf over comments he made in June citing a shortage of diverse talent.
"February is Black History Month, and we are proud to announce these investments at this time because they reflect our dedication to helping African American communities, many of which continue to fight the destructive economic impact of the pandemic," Santos said in a statement. "Wells Fargo wants to help drive stabilization and recovery by using our financial resources and our ability to act as a partner in order to generate better outcomes."
Bank of America, Citi and JPMorgan Chase have also pledged capital investments in minority-owned banks in recent months.
In September, Bank of America said it is investing $50 million in three MDIs: Detroit-based First Independence Corp., New Orleans-based Liberty Financial Services and Columbia, South-Carolina-based SCCB Financial Corp.
That same month, Citi also announced it would set aside $100 million for MDIs, split between $50 million in growth capital and $50 million in loan participation opportunities for multifamily rental housing. The funds are part of the bank's $1.15 billion, three-year initiative meant to promote anti-racist financial practices.
JPMorgan Chase in October said it would invest up to $50 million in capital and deposits in Black and Latinx-led MDIs and community development financial institutions (CDFIs) as part of the bank's $30 billion effort to close the racial wealth gap through a combination of loans, investments and philanthropy.