Wells Fargo Makes Equity Investments In Five Black-Owned Banks

Wells Fargo & Co WFC has announced equity investments in five Black-owned banks as part of its pledge of investing up to $50 million in Black Minority Depository Institutions (MDIs).

What Happened: The San Francisco-headquartered financial institution’s investments were aimed at two Georgia-based banks — Carver State Bank in Savannah and Citizens Trust Bank in Atlanta — plus First Independence Bank in Detroit, Liberty Bank in New Orleans and Unity National Bank in Houston.

This is Wells Fargo’s second round of investments in the MDIs. In February, the company announced investments in Broadway Federal Bank in Los Angeles, Carver Federal Savings Bank in New York City, Citizens Savings Bank & Trust in Nashville, Commonwealth National Bank in Mobile, Alabama, M&F Bank in Durham, North Carolina, and Optus Bank in Columbia, South Carolina.

In addition to equity investments, Wells Fargo is partnering with the banks on growth-focused financial, technological and product development strategies. Wells Fargo is also making its nationwide ATM network available for fee-free usage by the customers of the 11 MDIs.

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Why It Matters: Black-owned financial institutions can trace their history back to Virginia’s True Reformers Bank, which received its charter on March 2, 1888. There are currently 44 Black-owned financial institutions in the U.S., including credit unions, and these hold a cumulative total of roughly $6.68 billion in assets.

Black-owned banks are mostly at community bank levels in terms of asset size and branch footprint. The largest bank in this sector, OneUnited Bank in Boston, has $650 million in assets and five branches.

“The country’s MDIs are vital to minority communities, but over the last two decades, many have declined or have closed,” said William Daley, vice chairman of Public Affairs at Wells Fargo. “The capital investment we are announcing is important, but it’s our relationship approach that will make the difference in their futures. We want to be a partner to these important institutions and, in turn, have a positive effect on local communities.”

WFC Price Action: At last check Tuesday morning, Wells Fargo was trading at $40.26, down 1.24%.

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(Photo by Mike Mozart / Flickr Creative Commons.