Two of the nation’s oldest Black-owned banks are combining in a deal worth $105 million or more that’s set to close in the fourth quarter.
Durham, North Carolina-based Mechanics & Farmers Bank will merge into Columbia, South Carolina-based Optus Bank to create a roughly $1.3 billion-asset institution with 10 locations across two states, the lenders announced Wednesday.
Paul Mitchell, the chairman of Optus Bank and its holding company, called the combination “a defining moment – not only for our organizations, but for mission-driven banking in America.”
Optus and M&F are each federally designated minority depository institutions and certified community development financial institutions with more than a century of history. And both are often tapped as targets of investment when larger banks and organizations are looking to make a statement.
For example, at the height of recent racial equity consciousness in the U.S. – months after the killing of George Floyd by police – Optus and M&F were both among 11 Black-owned banks in which Wells Fargo pledged to invest. Similarly, Optus and M&F were the first beneficiaries of a $100 million investment by State Street into MDIs and CDFIs in 2024. And when the NFL in 2023 sought to bolster nonwhite-owned banks, Optus and M&F were among 16 institutions from which it borrowed $78 million.
“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,” Mitchell said in a statement Wednesday.
Once the transaction closes, Mitchell will serve as the chair of the combined holding company and bank. James Sills III, CEO and president of M&F’s holding company, will serve as CEO of the combined bank and holding company.
“M&F Bank was founded on the belief that every community deserves a financial institution that understands and serves its unique needs. That principle has guided us for more than a century and led us to this partnership with Optus,” Sills said in a statement Wednesday. “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.”
As part of the deal, M&F holding company shareholders will receive up to $53.30 per common share in cash, with $46.57 per share payable at closing and another $6.73 per share possible if certain outstanding shares of preferred stock are repurchased within a year of the transaction’s completion.
The deal would make a combined Optus and M&F the nation’s largest Black-owned bank, the institutions said Wednesday. Optus counted $785.2 million in assets as of the end of the first quarter, while M&F counted $517.5 million.
M&F, founded in 1907, has eight locations. Optus, which launched in 1921 as Victory Savings Bank in 1921, has two. Their combination will leave one less Black-owned bank in the U.S.; there are now 22, according to Optus.
