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Covington Represents CFBanc in Merger Creating Largest Black-Led Minority Depository Institution in U.S.

August 26, 2020

WASHINGTONCovington represented CFBanc Corporation (“City First”) in its transformational merger of equals with Broadway Financial Corporation (“Broadway”) 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., NA (“City First Bank”) and Broadway Federal Bank, f.s.b. (“Broadway Federal Bank”) each hold a strong financial position as Community Development Financial Institutions (CDFIs), 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. Between the beginning of 2015 and June 30, 2020, City First Bank and Broadway Federal Bank collectively deployed over $1.1 billion combined in loans and investments in their communities.

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 Covington team included Rusty Conner, Christopher DeCresce, Charlotte May, Susie Toumanian, Chul Hun Lee, and Sebastian Marotta (corporate), Jenna Wallace and Christopher Lowther (employee benefits), Kurt Baca, Jon Endean, and Liz Allison (tax), and Karen Solomon, Randy Benjenk, and Andrew Ruben (bank regulatory). 

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