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Wednesday, Nov 30, 2022

Broadway Financial Completes Merger to Create Largest Black-Owned Bank in the US

After hanging out a for-sale sign for two years, downtown-based Broadway Financial Corp. can finally breathe a sigh of relief.

Broadway Financial executives and investment bankers completed their merger with Washington, D.C.-based CFC Banc Corp. on April 1, creating CityFirstBroadway.

The new institution is the largest Black-led bank in the United States, with more than $1 billion in assets. Its assets account for nearly one-fifth of the $5 billion-plus held last year by Black-owned financial institutions in the United States.

The merger comes amid a sharp decline in the number of Black-owned financial institutions. According to data compiled by the Federal Deposit Insurance Corp., fewer than 20 remain in the United States, a drop of more than half from 2001.

The falloff reflects the battles many Black financial institutions have lost against big banks, which can offer lower-priced services, as well as the impact of Covid-19 pandemic restrictions on their customer base.

The road to becoming the biggest wasn’t easy for Broadway, which at one point nearly disappeared from the banking landscape after 75 years.

In the past year, Broadway rejected buyout offers — including a hostile one — from Steven Sugarman, the former chief executive of Santa Ana-based Banc of California. Sugarman eventually sold off his 1.8 million shares in Broadway last summer, giving up on his takeover bid.

Broadway Financial Corp. is the holding company that will run the combined bank, which will be known as CityFirstBroadway until a final brand can be settled on.

“We haven’t decided yet on the exterior signage or what the mats will look like when you walk into the door. Stay tuned on that,” said Brian Argrett, who became president, chief executive and vice chairman of the merged bank. “CityFirstBroadway is a unifying name,” he said.

Argrett, who spent several years of his career in L.A. in the early 2000s, ran Washington, D.C.-based City First. He is taking the mantle of president and CEO from Wayne-Kent Bradshaw, who had held the top spot at Broadway for more than a dozen years.

Bradshaw is stepping away from the bank as part of a succession plan. He will stay as chairman until April 1, 2023, after which time he will retire.  

The new company’s board will be composed of four board members from the Broadway ranks and five from the City First side of the ledger. City First chairwoman Marie Johns was appointed lead independent director.

The company will have dual headquarters in Los Angeles and Washington, D.C.
“You should not anticipate that we will go heavily into branching,” Argrett said.

Significantly, the new bank has increased total equity to roughly $135 million, which included a private sale of stock on April 7 to investors who added $32.9 million of equity.

Broadway plans to use the stock sale proceeds to drive more commercial lending and develop affordable housing, offer loans to small businesses, and jumpstart nonprofit development in financially underserved urban areas in Southern California and in the Washington, D.C. area., according to Argrett.

“There is a lot of opportunity to expand,” he said.

Major investors in the new institution include Walla Walla, Wash.-based Banner Corp., a $15 billion bank holding company with a sizeable presence in L.A.; Banc of America Strategic Investments Corp., the private equity arm of Charlotte, N.C.-based Bank of America Corp.; and Beverly Grove-based Cedars-Sinai Medical Center.

Other backers are New York-based Citigroup Inc.; San Francisco-based First Republic Bank; New York-based wealth manager Grace & White Inc.; New York-based banking giant JPMorgan Chase & Co.; Dallas-based Texas Capital Community Development Corp.; and San Francisco-based investment banking and brokerage firm Wells Fargo Central Pacific Holdings Inc., an affiliate of Wells Fargo & Co.

As part of the recent CityFirstBroadway private placement, Banc of America bought 4.9% of the voting shares of the combined institution. 


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