M&F Bancorp shareholders approve Optus Bank merger despite Triad counteroffers

Shareholders of M&F Bancorp have overwhelmingly approved a proposed merger with Optus Bank, a decision that positions the combined entity to become the largest Black-owned bank in the United States. The vote, which took place on November 4, saw approximately 98.6% of voting investors support the transaction. This outcome effectively rejects a series of counterproposals submitted by Triad Business Bank, which had sought to keep M&F headquartered in North Carolina. The deal is currently on track to close in the fourth quarter, subject to final regulatory approvals.

The merger involves the combination of Durham, North Carolina-based M&F Bancorp and Columbia, South Carolina-based Optus Bank. M&F reported assets of $503.5 million, while Optus held $764 million in assets. By joining forces, the two institutions will create a larger financial entity that surpasses the current market leader, New Orleans-based Liberty Bank & Trust, which reported $1.1 billion in assets as of June 30 according to Federal Deposit Insurance Corp. data. James A. Stewart, chair of M&F and its holding company, stated that the vote reflects shareholder confidence that this combination represents the best outcome for the bank. He thanked investors for their careful consideration throughout the process. James Sills III, M&F’s chief executive officer, described the vote as an important milestone, noting that the pending merger would position the combined bank to expand access to capital and economic opportunity across the Carolinas.

Triad Business Bank, based in Greensboro, North Carolina, had submitted four counterproposals to M&F in an effort to persuade the lender to remain in the state. Triad argued that the merger with Optus would move decision-making across state lines and leave North Carolina without a Black-owned bank headquarters. The rival bank proposed a multi-bank structure that would allow M&F to remain the holding company, retain its charter, name, and Durham headquarters, and codify a majority-Black board to maintain its status as a minority depository institution. Despite these efforts, M&F’s board considered the proposals and continued to recommend the Optus transaction. The bank stated it did not intend to comment further on the Triad proposals. Triad expressed gratitude to shareholders, employees, and customers who considered its proposals and stated that it respected the shareholders’ decision.

The merger will significantly expand Optus’ physical footprint. The two-branch South Carolina lender will gain access to M&F’s eight North Carolina locations, effectively quintupling its brick-and-mortar network. However, the transaction will reduce the total number of Black-owned banks in the United States to 16. Financial terms of the deal include a cash payment of $53.30 per share for M&F investors at closing. This amount is $6.73 higher than the initial guarantee issued in July, a difference resulting from the repurchase of M&F’s preferred stock. In comparison, Triad had offered $53.50 in cash at closing, assuming the additional $6.73 would arrive later under the Optus deal. However, Triad’s cash offer was limited to the first 25% of M&F shareholders to elect it, with remaining shareholders receiving 1.25 new shares of the combined company per share.

M&F’s board criticised Triad’s value projections, stating they were not based on current results but on a future Nasdaq listing. The bank noted that Triad’s share price had declined by more than 30% over the past six years and that its results had been predominantly unprofitable. Furthermore, under the Triad proposal, M&F shareholders would have held less than a majority of the combined company, specifically 47.4%. The shareholder vote for the Optus merger was delayed twice, initially set for October 7, then pushed to October 20, and adjourned again. M&F indicated that these delays were intended to allow shareholders sufficient time to consider Triad’s indication of interest.

The transaction still requires approval from four regulatory bodies: the Federal Reserve, the FDIC, the North Carolina Commissioner of Banks, and the South Carolina Board of Financial Institutions. Once these approvals are granted, the merger is expected to proceed to a fourth-quarter close, finalising the creation of the nation’s largest Black-owned banking institution.