Black banks are generally local but Los Angeles-based Broadway Federal Bank and Washington, D.C.-based City First Bank just combined to cover both coasts. The two institutions, by merging, also just created the first Black-led bank with over $1 billion in assets. The new entity formed will have roughly $850 million in deposits.
Black owned (and led) banks have declined sharply in recent years. The most recent data available from the Federal Deposit Insurance Corporation showed 48 Black owned banks in 2001 but just 20 remain today. The consolidation of Broadway Federal Bank and City First Bank is a move that will create a stronger institution and one that will be centered on community uplift. The newly minted entity will operate as a Community Development Financial Institution (CDFI), which means it must target at least 60% of its lending into low- to moderate-income communities. When banks lend locally, local communities win and with a CDFI structure, this bank will have a focus on that mission.
Focused lending in low- to moderate-income communities is essential for Black people, who disproportionately make up the population is such communities. However, with the onslaught of gentrification in American cities, lending in “low- to moderate-income” neighborhoods doesn’t necessarily mean lending to Black people. Indeed, lending to gentrifiers can actually help banking institutions fulfill their low- to moderate-income lending requirements. Targeting Black people within those communities requires much more intentionality, which Black banks have historically been very skilled at.
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