Durham-based M&F Bancorp, the second-oldest African-American owned bank in the U.S., adopted a 10-year shareholder rights plan aimed at promoting fair and equal treatment for its shareholders, CEO James Sills III says.
He says the plan will aid the bank’s continued progress and reduce the chance that an investor or group could gain control of the bank by making open-market purchases of M&F’s shares without fair compensation.
The new plan follows a 10-year rights plan that expired last year. It is also driven by recent regulatory approval of an agreement that may enable M&F to convert $80 million of preferred shares at a major discount, boosting its fortunes.
The U.S. Treasury provided the financing about two years ago to aid M&F’s effort to lend more money to individuals and businesses in low and moderate-income areas. The bank has successfully met the plan’s metrics for the first two years of the four-year plan, Sills says.
As a result, M&F would be allowed to pay back about $26.7 million to the Treasury, with the balance of $53.3 billion being added to the company’s capital, according to current estimates. That compares with M&F’s common stock equity of nearly $28 million as of December 2023.
That transaction is expected to occur in late 2026 or early 2027, provided M&F keeps meeting the rules of the program.
“That will have a tremendous impact on our capital,” Sills says. It could have a “transformational” effect on M&F’s ability to grow, add market share and serve more consumers and small business, he adds.
M&F has reported solid profitability in recent years, rebounding a decade ago when its future was in peril. Assets topped $500 million last year for the first time.
M&F reported a $5.7 million profit in 2023 and $4.5 million in 2022. For the first nine months of 2024, it had about net income of about $3.4 million, a decline from a year earlier that reflects pressures from higher interest rates, Sills says.
“It’s a big testament to all the work we have done,” he says. “North Carolina is a very competitive banking market with the regional and money center banks all here.”
North Carolina’s only African-American-owned bank has offices in Charlotte, Durham, Greensboro, Raleigh and Winston-Salem.
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