Community development finance leaders City First Bank of Washington, D.C., and Broadway Federal Bank in Los Angeles have entered into a transformational Merger of Equals agreement to create the first Black-led Minority Depository Institution (MDI) in the nation with more than $1 billion in combined assets under management and approximately $850 million in total depository institution assets (as of June 30, 2020). They want to expand access to capital in underserved urban areas.
Both organizations hold a strong financial position as Community Development Financial Institutions (CDFIs), and have a longstanding history of advancing economic and social equity through the provision of capital in low- to moderate-income communities. Combining the two institutions will increase their collective commercial lending capacity for investments in multifamily affordable housing, small businesses, and nonprofit development in financially underserved urban areas, while creating a national platform for impact investors.
The combined institution will maintain its CDFI status, requiring it to deploy at least 60% of its lending into low- to moderate-income communities. CDFIs help to close funding gaps, create jobs, expand critical social services and spur equitable economic development with a mission to strengthen the overall well-being of vulnerable communities. Since the beginning of 2015, City First Bank and Broadway Federal Bank have collectively deployed over $1.1 billion combined in loans and investments in their communities (as of June 30, 2020).
The new institution will maintain bi-coastal headquarters and will continue to serve and expand in the banks' current geographic areas, with a desire to scale to other high-potential urban markets. Under the terms of the merger agreement, which was unanimously approved by the boards of directors of both City First and Broadway, City First will merge with and into Broadway, with Broadway as the surviving corporation. However, according to newspaper reports, the combined entity will use City First as its banking brand.
The merger is expected to close in the first quarter of 2021, subject to satisfaction of customary closing conditions, including receipt of necessary regulatory approvals and approval by the shareholders of each company.