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Wells Fargo recently announced equity investments in six African American minority depository institutions (MDIs) as part of a March 2020 pledge to invest up to $50 million in Black-owned banks. In the ongoing pandemic, communities of color have been disproportionately impacted, and this investment is part of Wells Fargo’s effort to generate a more inclusive recovery.
Wells Fargo is announcing investments in the following institutions:
- Broadway Federal Bank, in Los Angeles, California
- Carver Federal Savings Bank, in New York, 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
Importance of MDIs in U.S. financial ecosystem
MDIs, some dating back to the early 1900s, serve communities in which a higher share of the population lives in low and moderate income (LMI) census tracts and in which higher shares of residents are minorities. MDIs have played an important role in providing mortgage credit, small business lending, and other banking services to minority and LMI communities.
Equity investment structure
Wells Fargo’s 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. These are primarily non-voting positions and are designed to enable the banks to maintain their MDI status. Regarding our commitment being in the form of equity vs. deposits, $1 of new deposits means an MDI can make $1 of new loans, but $1 of new equity means an MDI can make $10 of new loans.
Dedicated Wells Fargo banking relationships
As part of the capital investment, the banks will have access to a dedicated Wells Fargo relationship team that will provide financial, technological and product development expertise in order to support each institution grow and benefit their local community.
