By Stacy M. Brown, NNPA Newswire Senior National Correspondent
Wells Fargo is observing Black History Month in a meaningful way.
The banking giant has selected six African American minority depository institutions (MDIs) for equity investments.
Broadway Federal Bank in Los Angeles, Carver Federal Savings Bank in New York, Citizens Savings Bank & Trust in Nashville, Commonwealth National Bank in Mobile, Ala., M&F Bank in Durham, N.C., and Optus Bank in Columbia, S.C., are receiving critical equity capital, because of Well Fargo’s generous contribution.
The financial commitment structure means that the investments are in the form of critical equity capital, which is foundational to the MDIs’ ability to expand lending and deposit-taking capacity in their communities.
The investments, primarily non-voting positions, are designed to enable the banks to maintain their MDI status.
Wells Fargo said it is also supporting each MDI’s development through a banking relationship in the form of a single touchpoint coverage model that will help them access Wells Fargo’s expertise and pursue strategic priorities like entering new markets, expanding locations, designing new products, and hiring staff to support loan growth.
The investments are part of a March 2020 pledge by Wells Fargo to invest as much as $50 million in Black-owned banks.
“MDIs are a viable and very important sector of the banking industry that can directly support the financial health of communities where typically there are gaps in banking services,” said Gigi Dixon, head of External Engagement for Wells Fargo’s Diverse Segments, Representation & Inclusion group.
“By working together with MDIs, Wells Fargo can address some of the issues where these banks are located and help reach the unbanked. These investments will complement our community development efforts while positively impacting people in many communities we serve.”
“We are trying to break the cycle where these institutions and their communities have faced barriers to raising significant capital,” Dixon said. “Ideally, this is going to promote the ability of MDIs to stimulate growth in low- to middle-income communities and be more profitable.”
The Wells Fargo commitment is in the form of equity instead of deposits. For example, with $1 of new deposits, an MDI can make $1 of new loans, but with $1 of new equity, an MDI can make $10 of new loans.
Wells Fargo officials said its investment goes beyond cutting a check, but the goal is to have meaningful, lasting relationships with the banks.
“We’ve spent considerable time getting to know each MDI and understanding their unique needs,” Dixon noted.
Each MDI will have a dedicated relationship team as part of Corporate & Investment Banking.
Wells Fargo will provide day-to-day relationship coverage and a central point of connectivity for MDIs to access various resources.
Dixon asserted that the MDIs receiving the investment had requested non-financial resources in their business plans, and Wells Fargo will be aligning resources to those needs.
Some of the requests include technology solutions for digital transformation, leveraging Wells Fargo’s consumer footprint (ATM/branch access), loan origination partnerships), financial education, and mentorship.
“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,” said Bill Daley, vice chairman of Public Affairs at Wells Fargo. “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.”