Wells Fargo & Co. made equity investments in six Black-owned banks – including one in Alabama – as part of a broader $50 million pledge to support minority-focused lenders.
The San Francisco-based bank will assign dedicated teams to provide the lenders with financial, technology or product expertise, it said in a statement Monday. Wells Fargo didn’t disclose the amounts of each investment.
The lenders are:
- Broadway Federal Bank in Los Angeles
- Carver Federal Savings Bank in New York
- Citizens Savings Bank & Trust in Nashville, Tennessee
- Commonwealth National Bank in Mobile, Alabama
- M&F Bank in Durham, North Carolina
- Optus Bank in Columbia, South Carolina
“It’s not just: ‘OK, here’s our money, call us if you have a question,’” Bill Daley, vice chairman of public affairs at Wells Fargo, said in an interview. “We’ve taken our time to try to understand these institutions,” and depending on their needs, Wells Fargo will advise on areas such as digital transformation, branch access and loan origination, he said.
There will be more investments coming in future months, Daley said in a separate interview on Bloomberg Television Monday.
“These institutions, many of which have been around for over 100 years, are really vital to these communities, and if we’re going to begin to address the inequity that’s in many of our communities, these institutions need to be healthier and need to be able to grow, to be more competitive,” Daley said.
The number of Black-owned banks in the U.S. has dwindled to 18 from 48 over the last two decades, and their combined assets have declined since the 2008 crisis, according to data from the Federal Deposit Insurance Corp.
In an effort to bolster the industry, Bank of America Corp. took equity stakes in 12 minority depository institutions as part of a $50 million drive, while Citigroup Inc. pledged as much as $50 million in growth capital to MDIs and recruited more than a half-dozen lenders to be part of a mentoring program to help them learn the ropes of underwriting bigger loans. Morgan Stanley pledged $24.6 million to three lenders. The capital infusions by large banks are structured to maintain minorities’ control in MDIs and stay within regulatory thresholds.
“Such investments can help Black banks upgrade their technological infrastructure,” Eldar Beiseitov, a business economist at the Federal Reserve Bank of St. Louis, wrote in a report Thursday. “The pandemic will increase the shares of nonperforming real estate and small-business loans, so increasing funding sources and capital will become critical, especially for MDIs.”
Corporate America is increasingly responding to the growing awareness of systemic racism in the U.S. after the killings of African Americans, including George Floyd, by police officers. While bank leaders have denounced racism and offered overtures to minority groups, critics say the industry has created and prolonged economic disparities.
Wells Fargo Chief Executive Officer Charlie Scharf hired Kleber Santos to lead the firm’s diversity efforts late last year as part of a push to “drive meaningful change throughout the organization and better serve our diverse customer base and underserved communities,” according to a statement at the time. Scharf came under fire in September over comments he made tying the struggle to find experienced Black executives to a limited talent pool.
The investments “reflect our dedication to helping African American communities, many of which continue to fight the destructive economic impact of the pandemic,” Santos said in the statement Monday. “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.”
(With assistance from David Westin and Jenny Surane.)