WASHINGTON, DC and LOS ANGELES, CA (August 26, 2020) – CFBanc Corporation (“City First”) in Washington, DC and Broadway Financial Corporation (“Broadway,” Nasdaq: BYFC) in Los Angeles, CA announced today that they have entered into a transformational Merger of Equals agreement to create the largest Black-led Minority Depository Institution (MDI) in the nation with more than $1 billion in combined assets under management and approximately $850 million in total depository institution assets (as of June 30, 2020). Combining the two institutions will increase their collective commercial lending capacity for investments in multifamily affordable housing, small businesses, and nonprofit development in financially underserved urban areas, while creating a national platform for impact investors.
City First Bank of D.C., National Association (“City First Bank,” a City First subsidiary) and Broadway Federal Bank, f.s.b. (“Broadway Federal Bank,” a Broadway subsidiary) each hold a strong financial position as Community Development Financial Institutions (CDFI), and have a longstanding history of advancing economic and social equity through the provision of capital in low- to moderate-income communities. The combined institution will maintain its CDFI status, requiring it to deploy at least 60% of its lending into low- to moderate-income communities. CDFIs help to close funding gaps, create jobs, expand critical social services and spur equitable economic development with a mission to strengthen the overall well-being of vulnerable communities. Since the beginning of 2015, City First Bank and Broadway Federal Bank have collectively deployed over $1.1 billion combined in loans and investments in their communities (as of June 30, 2020).
“Given the compounding factors of a global pandemic, unprecedented unemployment and social unrest resulting from centuries of inequities, the work of CDFIs has never been more urgent and necessary,” said Brian E. Argrett, President and CEO of City First Bank and the Vice Chair and CEO of the new combined institution. “As part of this historic merger, we are demonstrating that thriving urban neighborhoods are viable markets that require a dedicated focus, long-term commitment and critical access to capital.” The combined nine-member board will be composed of five directors from City First and four from Broadway. Broadway’s president and CEO Wayne-Kent A. Bradshaw will lead the board of the combined institution as its chair. City First board chair Marie C. Johns will serve as the institution’s lead independent director. “The new combined institution will strengthen our position and will help drive both sustainable economic growth and societal returns,” said Mr. Bradshaw. “We envision building stronger profitability and creating a multiplier effect of capital availability for our customers and for the communities we serve.”
The new institution will maintain bi-coastal headquarters and will continue to serve and expand in the banks’ current geographic areas, with a desire to scale to other high-potential urban markets. As a national bank, the combined entity intends to continue to operate under the supervision of the Office of the Comptroller of the Currency (OCC) and to be listed on the Nasdaq Capital Market. As a Community Development Financial Institution (CDFI), a Minority Depository Institution (MDI), a Benefit Corporation and a member of the Global Alliance of Banking on Values, the new institution intends to continue to firmly anchor its work, results and values in the rapidly expanding field of social finance and accretive stakeholder benefits.
Under the terms of the merger agreement, which was unanimously approved by the boards of directors of both City First and Broadway, City First will merge with and into Broadway, with Broadway as the surviving corporation. Broadway Federal Bank, the wholly-owned subsidiary of Broadway, will merge with and into City First Bank, the wholly-owned subsidiary of City First, with City First Bank as the surviving bank. At the closing of the merger, City First common shareholders will receive 13.626 shares of Broadway common stock for each share of City First common stock they own, resulting in Broadway stockholders owning 52.5% and City First shareholders owning 47.5% of the combined institution.
The merger is expected to close in the first quarter of 2021, subject to satisfaction of customary closing conditions, including receipt of necessary regulatory approvals and approval by the shareholders of each company. Raymond James & Associates, Inc. is acting as financial advisor, and has rendered a fairness opinion to the board of directors of City First. Covington & Burling LLP is serving as legal counsel to City First. Keefe, Bruyette & Woods, A Stifel Company, is acting as financial advisor, and has rendered a fairness opinion to the board of directors of Broadway. Arnold & Porter Kaye Scholer LLP is serving as legal counsel to Broadway.