SC’s only Black-owned bank receives multi-million equity investment from Wells Fargo
South Carolina’s only Black-owned bank, which traces its history to 1921 recently received a $3 million investment from one of the world’s largest banks.
Wells Fargo announced equity investments in Optus Bank of Columbia and along with five other Minority Depository Institutions nationally.
With the capital from Wells Fargo, Optus Bank can be more equipped to help local minority communities by offering more small business loans, mortgage loans, financial education and a larger deposit-taking capacity. This growth can help meet the bank’s mission to serve those previously unbanked, underbanked and historically underserved.
“This is a catalytic, transformational investment,” said Dominik Mjartan, president and CEO of Optus Bank. “Every loan, every investment we make with that capital hopefully gets paid back and gets revolved into another business, so this is not a one time impact.”
Rather than a deposit investment that can turn $1 of new deposits into $1 of new loans for a Minority Depository Institution, or MDI, Wells Fargo made an equity investment in which $1 of new equity can make $10 of new loans for the six banks.
These investments come after a March 2020 pledge by Wells Fargo to invest $50 million in Black-owned banks. The company said in a news release that it wants to help “communities of color” who “have been disproportionately impacted” by the pandemic and aid in inclusive recovery from the pandemic.
Megan Teare, senior vice president of community lending and investment for Wells Fargo, said the six banks were chosen after her company reached out to every African American MDI in the country and investments into more Black-owned banks will be announced soon.
“We have really taken an approach of getting to know each bank individually, understanding their strategic plan, their unique financial condition and situation, their financial and other needs,” Teare said.
The timing of the investment was huge for Optus because it allowed the bank to offer the second round of Paycheck Protection Program Loans to small business owners in January, Mjartan said. Optus received the investment at the end of 2020.
“February is Black History Month, and we are proud to announce these investments at this time because they reflect our dedication to helping African American communities, many of which continue to fight the destructive economic impact of the pandemic,” said Kleber Santos, head of diverse segments, representation and inclusion at Wells Fargo.
Optus Bank evolved from Victory Savings Bank, which was founded 100 years ago by a group of Black men and women business owners to serve the Black community, which was often excluded from the banking system, according to Mjartan. One of the original founders was Modjeska Monteith Simkins, a civil rights leader from Columbia.
In 1999, the bank failed, and a group of Black business leaders recapitalized the bank, which became South Carolina Community Bank. After the recession in 2008, the bank struggled again, and current chairman Paul Mitchell personally invested in the bank to keep it afloat. It became Optus Bank in 2014.
When Mjartan joined Optus Bank in 2017, he said it had around $47 million in assets. Now it has about $200 million in assets and $20 million in equity.
“As we got through the Great Recession and the economy turned around, it became obvious to me that with the right management and capital, that the bank could be saved,” Mitchell said. He didn’t want the bank to become one of the nearly 50% of African American-owned banks that closed around that time.
As an MDI, Optus Bank tends to serve more communities with populations in the low and moderate income census tracts and which have a higher percentage of minorities, according to Wells Fargo. Optus is also a certified Community Development Financial Institution, one of 1,170 in the country that are mainly focused on driving community development, according to the U.S. Department of the Treasury.
“The investment and support from Wells Fargo will allow us to substantially increase our impact on closing the racial wealth gap,” said Mjartan.
Tangible goals the bank has set are to create $100 million in Black wealth over 10 years, reach $1 billion in assets and raise $100 million in impact investment capital. An Optus Bank report states that 90% of its loans are invested in low-income communities, minority and/or women owned businesses or homes.
The other banks included in the Wells Fargo announcement are Broadway Federal Bank in Los Angeles, California; Carver Federal Savings Bank in New York, New York; Citizens Savings Bank & Trust in Nashville, Tennessee; Commonwealth National Bank in Mobile, Alabama and M&F Bank in Durham, North Carolina.
Other than financial support, Wells Fargo committed to provide technological and product development expertise to each institution and to continue to build a supportive, ongoing relationship with the banks, said Gigi Dixon, head of external engagement in diverse segments, representation and inclusion for Wells Fargo.
“The capital and dedicated financial, technological and institutional support provided by Wells Fargo will strengthen Optus Bank’s abilities to grow prosperity and economic stability across our Columbia communities,” Mayor Steve Benjamin said.
