Writer: Alejandro Sanchez
2 min read JULY 2021 — This year, Wells Fargo announced its intention to invest up to $50 million in thirteen African American-owned Minority Depository Institutions (MDIs). Atlanta-based Citizen Trust Bank was selected to receive part of the funding. The program is aimed at supporting African American communities where MDIs are crucial for economic development and housing accessibility.
MDIs began working for underserved communities in the early 20th century, when major financial institutions had the legal right to decline service based on race. As populations of color grew throughout the country, MDIs and Community Development Financial Institutions (CDFIs) became an essential component for minority-owned businesses and the communities where they operated. Currently, through investments like that carried out by Wells Fargo, large financial institutions can impact segments of society traditionally neglected by the financial system.
“The partnership enhances our ability to deploy more capital in our markets and beyond. We appreciate Wells Fargo for its commitment and alliance in providing solutions to the very important challenge of addressing inequalities that disproportionately impact communities of color,” said Cynthia Day, president and CEO of Citizens Trust Bank, in a Business Wire report. The influx of resources is expected to help the Atlanta-based bank maintain its status as an MDI, as well as expand its lending and deposit capacity. At the same time, through the partnership, Wells Fargo will be able to enter new markets, introduce new products and bring new personnel to support the growth.
The well-established relationships with minority-owned businesses in Atlanta and other strategic locations makes Citizen Trust Bank an ideal partner for Wells Fargo in this process, as explained by Day in an interview last year with Focus:. “We always say that we are not just in the community, we are of the community. We are engaging customers and providing financial education. We also build our products around that. Our customers are representative of the communities we serve, from age, personal economic experience and type and maturity of businesses.”
From the perspective of Wells Fargo, there is also a commitment to assist underserved demographics in Atlanta, as reiterated by Mike Donnelly, regional president of Wells Fargo during a recent interview with Focus:. “We knew that we would be receiving proceeds and fees for processing PPP loans. Our CEO Charlie Scharf stated from the beginning that we were going to take the gross processing fees from PPP and we created a $420 million Open for Business Fund. The purpose of it is to focus on small businesses that had been impacted the hardest by COVID, which includes African American, Hispanic, Asian and Native American small businesses and that’s where those proceeds are going.”
This partnership is part of a larger strategy designed by Wells Fargo to invest $175 billion in small businesses, making Atlanta a focal point in this endeavor. While the overall economy suffered the consequences of the pandemic, minority-owned businesses were disproportionately more vulnerable to face bankruptcy or significant reduction in income. Despite some improvements in the latest distribution of PPP loans, and other relief packages, partnerships such as that between Wells Fargo and Citizen Trust Bank are essential to provide structural solutions to a historic problem.
Kristi Blokhin / Shutterstock.com