Discriminatory bank practices have contributed to the wealth gap amongst the races.
Last month, Optus Bank and Mechanics joined forces with Farmers Bank in a $105 million deal, resulting in the largest Black-owned financial institution in the United States, holding approximately $1.27 billion in assets.
BlackAmericaWeb reported, “The big wigs at Optus Bank and Mechanics & Farmers Bank have come together for an agreement that would consolidate approximately $1.27 billion in assets and over 220 years of Black banking experience. Based on the official press release…, parent companies Optus Financial Corporation and M&F Bancorp Inc. are now awaiting approval from shareholders of the latter and a set of required regulatory approvals as well. The ultimate goal is to position both entities as one united front with enhanced impact, expanded access to capital and advanced economic opportunities overall within the community.”
A statement from M&F Bank reads, “The Transaction represents one of the most significant MDI combinations in recent years and underscores the enduring strength and relevance of mission-driven banking. By combining complementary capabilities and deep community roots, the resulting institution will be uniquely positioned to enhance its impact while preserving the legacy and purpose that have defined both organizations.
“The announcement comes at a pivotal time as Optus Bank prepares to celebrate 105 years of ‘Banking on Communities’ this October. Founded in 1921 as Victory Savings Bank, Optus has evolved into one of the nation’s leading MDIs and certified Community Development Financial Institutions (‘CDFIs’), dedicated to expanding access to credit, capital, and financial services. Similarly, M&F Bank, founded in 1907, has a longstanding history of empowering individuals, families, and businesses throughout North Carolina and is widely recognized as one of the nation’s oldest and most respected African American-owned financial institutions. United by a shared vision and purpose, the two organizations are well-positioned to expand economic mobility and community impact.”
When the deal is approved, the partnership will spread to over 10 locations in North Carolin and South Carolina.
M&F’s President James H. Sills will serve as chief executive officer, while Paul Mitchell of Optus Banks will serve as chairperson.
The deal is expected to close in the fourth quarter of 2026.
Sills said, “We share a common mission, aligned values, and a steadfast commitment to our customers and communities. This Transaction enables us to honor our legacy while providing enhanced resources and capabilities to those we serve.”
Mitchell seemed to echo those sentiments, himself stating, “Together, we will create a stronger institution with greater scale, enhanced capabilities, and an expanded capacity to advance economic mobility throughout the Carolinas and beyond.”
Peter Kerich of Yahoo reported, “Two of America’s oldest Black-owned banks are joining forces in a move that could strengthen access to capital in Black communities. If approved, the merger would create the largest Black-owned bank in the United States by assets…
“According to BizJournals, the proposed merger combines more than 220 years of Black banking history. Mechanics & Farmers Bank was founded in 1907 and is the oldest nd is the Black-owned bank in North Carolina. Optus Bank traces its roots back to 1921. The combined institution is expected to operate 10 branches across North and South Carolina while continuing its focus on expanding access to homeownership, small business lending and financial services in historically underserved communities.”
Banks in America have a long history of discriminating against Black Americans, which contributes to the wealth gap amongst the races.
The wealth gap is often due to redlining, higher interest rates for Black people even when their income and credit rates are the same as their White counterparts and offering stricter loan terms than White Americans.
In 2023, BYU News reported that banks often offered Black Americans inferior loans even when they were more qualified than White Americans.
That reality is why many believe that it is important for Black banks to grow and for more Black Americans to set up accounts at institutions like Unity Bank in Texas and Liberty Bank in Louisiana.
In 2023, PBS reported, “The Justice Department accused Los Angeles-based City National Bank on Thursday of discrimination by refusing to underwrite mortgages in predominantly Black and Latino communities, requiring the bank to pay more than $31 million in the largest redlining settlement in history.
“City National is the latest bank in the past several years to be found systematically avoiding lending to racial and ethnic minorities, a practice that the Biden administration has set up its own task force to combat.
“The Justice Department says that between 2017 and 2020, City National avoided marketing and underwriting mortgages in majority Black and Latino neighborhoods in Los Angeles County. Other banks operating in those neighborhoods received six times the number of mortgage applications that City National did, according to federal officials.
“The Justice Department alleges City National was so reluctant to operate in neighborhoods where most of the residents are people of color, the bank only opened one branch in those neighborhoods in the past 20 years. In comparison, the bank opened or acquired 11 branches in that time period. In addition, no employee was dedicated to underwriting mortgages at that one branch, unlike branches in majority-White neighborhoods.”
While there is probably nothing that will completely stop discrimination and racism in banking, the merger between the two Black banking powerhouses could show how the Black community can avoid that discrimination by having bankers who look like them and come from the same communities.
Rapper Killer Mike got more Black people to support Black banks with the #BankBlack movement in the summer of 2016, culminating with the creation of the Greenwood digital banking platform four years later.
With moves like those, maybe the resurgence of Black Wall Street is on the horizon.
