Community development bank (CDB) or Community Development Financial Institution (CDFI) is a development bank or

credit union A credit union, a type of financial institution similar to a commercial bank, is a member-owned nonprofit financial cooperative. Credit unions generally provide services to members similar to retail banks, including deposit accounts, provision ...

that focus on serving people who have been locked out of the traditional financial systems such as the

unbanked The unbanked are adults who do not have their own bank accounts. Along with the underbanked, they may rely on alternative financial services for their financial needs, where these are available. Causes Some reasons a person might not have a b ...

underbanked The underbanked is a characteristic describing people or organizations who do not (or volunteer to not) have sufficient access to mainstream financial services and products typically offered by retail banks and thus often deprived of banking service ...

in deprived local communities. They emphasize the long term development of communities and provide loans such as micro-finance or venture capital. In the United States these became popular after 1994 when the

US Congress The United States Congress is the legislature of the federal government of the United States. It is bicameral, composed of a lower body, the House of Representatives, and an upper body, the Senate. It meets in the U.S. Capitol in Washi ...

created community development banks and allowed them to get funding at very low rates from the US treasury.

In the United States

In the

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., federal district, five ma ...

, community development banks are

commercial bank A commercial bank is a financial institution which accepts deposits from the public and gives loans for the purposes of consumption and investment to make profit. It can also refer to a bank, or a division of a large bank, which deals with co ...

s that operate with a mission to generate economic development in low- to moderate-income (LMI) geographical areas and serve residents of these communities. In the United States, community development banks are certified as such by the

Community Development Financial Institutions Fund The Community Development Financial Institutions Fund (CDFI Fund) promotes economic revitalization in distressed communities throughout the United States by providing financial assistance and information to community development financial institut ...

, a department within the

U.S. Department of the Treasury The Department of the Treasury (USDT) is the national treasury and finance department of the federal government of the United States, where it serves as an executive department. The department oversees the Bureau of Engraving and Printing and th ...

. Organizers wishing to start a new CDB can seek a state or national bank charter. Federally chartered CDBs are regulated primarily by the

Office of the Comptroller of the Currency The Office of the Comptroller of the Currency (OCC) is an independent bureau within the United States Department of the Treasury that was established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all natio ...

, like any national bank. According to the ''OCC Charter Licensing Manual'', CDBs are required "to lend, invest, and provide services primarily to LMI individuals or communities in which it is chartered to conduct business." State-chartered community development banks are subject to regulations, qualifications, and definitions that vary from state to state.

CDFI Certified Banks

In order to become a certified Community Development Financial Institution (CDFI), CD Banks must apply to the United States

. Successful applicants will have a primary mission of promoting community development and principally serve under served markets and provide development services, in addition to meeting other requirements. CDFI Banks provide retail banking services, they usually target customers from "financially underserved" demographics. While community development banks are only one type of community development financial institution, or CDFI, some organizations use the terms interchangeably.

Non-certified community development banks

Although a very small number of US banks are certified CDFIs, many more may be considered Community Development Banks based on their dedication to supporting local economic development and their focus on a particular underserved community. Minority Depository Institutions (MDIs), also known as Minority Banks, are owned by and serve a socially or economically disadvantaged minority community (designated by the FDIC). Community Development Banking Institution (CDBI) is an alternate designation designed b
National Community Investment Fund
(NCIF) to identify US banks that locate branches and provide loans in economically distressed communities.

Notable community development banks

One of the best known community development banks was

ShoreBank ShoreBank was a community development bank founded and headquartered in Chicago. At the time of its closing it was the oldest and largest such institution, and in 2008 had $2.6 billion in assets. It was owned by ShoreBank Corporation, a regulated ...

, founded in

Chicago (''City in a Garden''); I Will , image_map = , map_caption = Interactive Map of Chicago , coordinates = , coordinates_footnotes = , subdivision_type = List of sovereign states, Count ...

in 1973. ShoreBank had branches in Chicago's South and West sides,

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, and

Detroit Detroit ( , ; , ) is the largest city in the U.S. state of Michigan. It is also the largest U.S. city on the United States–Canada border, and the seat of government of Wayne County. The City of Detroit had a population of 639,111 at ...

. The bank established subsidiaries that provide equity investing, consulting, and environmental banking services and affiliated nonprofits that provide related financing, technical assistance, and consulting services. ShoreBank and its affiliated companies have projects in 30 countries. Notably, ShoreBank incorporated environmental conservation into its mission during the 1990s. On August 20, 2010, ShoreBank's banking operations were closed by the FDIC, reopening under

Urban Partnership Bank Urban Partnership Bank was a U.S. Federal Deposit Insurance Corporation-insured, full-service community development bank in the United States with $1.4 billion in assets. It was established August 20, 2010 when it acquired the deposits and som ...

. The Grameen Bank of

Bangladesh Bangladesh (}, ), officially the People's Republic of Bangladesh, is a country in South Asia. It is the List of countries and dependencies by population, eighth-most populous country in the world, with a population exceeding 165 million pe ...

is a microfinance organization and community development bank founded by Muhammad Yunus. The bank has grown into a family of over two dozen for-profit and nonprofit enterprises including the Grameen Foundation, and the Grameen Bank and its founder were awarded the

Nobel Peace Prize The Nobel Peace Prize is one of the five Nobel Prizes established by the will of Swedish industrialist, inventor and armaments (military weapons and equipment) manufacturer Alfred Nobel, along with the prizes in Chemistry, Physics, Physiolog ...

in 2006. Other CDBs in the United States include: * Beneficial State Bank in

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Carver Federal Savings Bank Carver Federal Savings Bank, opened under the leadership of M. Moran Weston in 1948, is the "largest black-owned financial institution" in the United States. Carver Bancorp, Inc. is its holding company. The bank has been designated by the U. ...

New York, NY New York, often called New York City or NYC, is the most populous city in the United States. With a 2020 population of 8,804,190 distributed over , New York City is also the most densely populated major city in the Un ...

Central Bank of Kansas City
in

Kansas City, MO Kansas City (abbreviated KC or KCMO) is the largest city in Missouri by population and area. As of the 2020 United States census, 2020 census, the city had a population of 508,090 in 2020, making it the List of United States cities by populat ...

City First Bank of D.C.
in Washington, D.C.
First NBC Bank
in

New Orleans, LA New Orleans ( , ,New Orleans
Merriam-Webster. ; french: La Nouvelle-Orléans , es, Nuev ...

Hope Community Credit Union
in Jackson, MS
Liberty Bank & Trust
in

New Orleans, LA New Orleans ( , ,New Orleans
Merriam-Webster. ; french: La Nouvelle-Orléans , es, Nuev ...

Louisville Community Development Bank
in Louisville, KY
Neighborhood National Bank
in

San Diego, CA San Diego ( , ; ) is a city on the Pacific Ocean coast of Southern California located immediately adjacent to the Mexico–United States border. With a 2020 population of 1,386,932, it is the eighth most populous city in the United States ...

One PacificCoast Bank
in

California California is a state in the Western United States, located along the Pacific Coast. With nearly 39.2million residents across a total area of approximately , it is the most populous U.S. state and the 3rd largest by area. It is also the ...

Oregon Oregon () is a state in the Pacific Northwest region of the Western United States. The Columbia River delineates much of Oregon's northern boundary with Washington, while the Snake River delineates much of its eastern boundary with Idah ...

, and Washington * Southern Bancorp in Arkadelphia, AR
University National Bank
in St. Paul, MN * OneUnited Bank in Boston, MA Organizations that support, advocate, and convene Community Development Banks in the US:
Community Development Bankers Association
(CDBA)
National Community Investment Fund
(NCIF)
The CDFI Fund

References

{{DEFAULTSORT:Community Development Bank Banks Community development financial institutions Ethical banking