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

development bank Development finance institution (DFI), also known as a Development bank, is a financial institution that provides risk capital for economic development projects on a non-commercial basis. DFIs are often established and owned by governments or ...

credit union A credit union is a member-owned nonprofit organization, nonprofit cooperative financial institution. They may offer financial services equivalent to those of commercial banks, such as share accounts (savings accounts), share draft accounts (che ...

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 ban ...

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 serv ...

in deprived local communities. They emphasize the long term development of communities and provide loans such as

micro-finance Microfinance consists of financial services targeting individuals and small businesses (SMEs) who lack access to conventional banking and related services. Microfinance includes microcredit, the provision of small loans to poor clients; saving ...

or venture capital. In the United States these became popular after 1994 when the

US Congress The United States Congress is the legislature, legislative branch of the federal government of the United States. It is a Bicameralism, bicameral legislature, including a Lower house, lower body, the United States House of Representatives, ...

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 (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...

, community development banks are

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

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, 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. It is one of 15 current U.S. government departments. The department oversees the Bureau of Engraving and ...

. 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 corporate charter, charter, bank regulation ...

, 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 Community Development Financial Institutions Fund. 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 Retail banking, also known as consumer banking or personal banking, is the provision of services by a bank to the general public, rather than to companies, corporations or other banks, which are often described as wholesale banking (corporate ...

services, they usually target customers from "financially underserved" demographics. While community development banks are only one type of

community development financial institution A community development financial institution (US) or community development finance institution (UK) - abbreviated in both cases to CDFI - is a financial institution that provides credit and financial services to underserved markets and populations ...

, 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 regulat ...

, founded in

Chicago Chicago is the List of municipalities in Illinois, most populous city in the U.S. state of Illinois and in the Midwestern United States. With a population of 2,746,388, as of the 2020 United States census, 2020 census, it is the List of Unite ...

in 1973. ShoreBank had branches in Chicago's

South South is one of the cardinal directions or compass points. The direction is the opposite of north and is perpendicular to both west and east. Etymology The word ''south'' comes from Old English ''sūþ'', from earlier Proto-Germanic ''*sunþa ...

and West sides,

Cleveland Cleveland is a city in the U.S. state of Ohio and the county seat of Cuyahoga County. Located along the southern shore of Lake Erie, it is situated across the Canada–U.S. maritime border and approximately west of the Ohio-Pennsylvania st ...

, and

Detroit Detroit ( , ) is the List of municipalities in Michigan, most populous city in the U.S. state of Michigan. It is situated on the bank of the Detroit River across from Windsor, Ontario. It had a population of 639,111 at the 2020 United State ...

. 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. The

Grameen Bank Grameen Bank () is a microfinance, specialized community development bank founded in Bangladesh. It provides small loans (known as microcredit or "grameencredit") to the impoverished without requiring collateral. Grameen Bank is a statutory ...

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 and among the List of countries and dependencies by ...

is a

microfinance Microfinance consists of financial services targeting individuals and small businesses (SMEs) who lack access to conventional banking and related services. Microfinance includes microcredit, the provision of small loans to poor clients; saving ...

organization and community development bank founded by

Muhammad Yunus Muhammad Yunus (born 28 June 1940) is a Bangladeshi economist, entrepreneur, and civil society leader who has been serving as the Chief Adviser of Bangladesh, Chief Adviser of the Interim government of Muhammad Yunus, interim Yunus ministry, g ...

. 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 (Swedish language, Swedish and ) is one of the five Nobel Prizes established by the Will and testament, will of Sweden, Swedish industrialist, inventor, and armaments manufacturer Alfred Nobel, along with the prizes in Nobe ...

in 2006. Other CDBs in the United States include: *

Beneficial State Bank Beneficial State Bank (formerly One PacificCoast Bank, FSB; and OneCalifornia Bank) is an Oakland, California-based community development bank. The bank was founded in 2007 by billionaire philanthropist and former presidential candidate Tom S ...

Oakland, CA Oakland is a city in the East Bay region of the San Francisco Bay Area in the U.S. state of California. It is the county seat and most populous city in Alameda County, California, Alameda County, with a population of 440,646 in 2020. A major We ...

* Carver Federal Savings Bank in

New York, NY New York, often called New York City (NYC), is the List of United States cities by population, most populous city in the United States, located at the southern tip of New York State on New York Harbor, one of the world's largest natural harb ...

Central Bank of Kansas City
in Kansas City, MO
City First Bank of D.C.
in

Washington, D.C. Washington, D.C., formally the District of Columbia and commonly known as Washington or D.C., is the capital city and federal district of the United States. The city is on the Potomac River, across from Virginia, and shares land borders with ...

First NBC Bank
in

New Orleans, LA New Orleans (commonly known as NOLA or The Big Easy among other nicknames) is a Consolidated city-county, consolidated city-parish located along the Mississippi River in the U.S. state of Louisiana. With a population of 383,997 at the 2020 ...

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

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

San Diego, CA San Diego ( , ) is a city on the Pacific coast of Southern California, adjacent to the Mexico–United States border. With a population of over 1.4 million, it is the List of United States cities by population, eighth-most populous city in t ...

One PacificCoast Bank
in

California California () is a U.S. state, state in the Western United States that lies on the West Coast of the United States, Pacific Coast. It borders Oregon to the north, Nevada and Arizona to the east, and shares Mexico–United States border, an ...

Oregon Oregon ( , ) is a U.S. state, state in the Pacific Northwest region of the United States. It is a part of the Western U.S., with the Columbia River delineating much of Oregon's northern boundary with Washington (state), Washington, while t ...

, and Washington * Southern Bancorp in Arkadelphia, AR
University National Bank
in St. Paul, MN * OneUnited Bank in

Boston, MA Boston is the capital and most populous city in the Commonwealth (U.S. state), Commonwealth of Massachusetts in the United States. The city serves as the cultural and Financial centre, financial center of New England, a region of the Northeas ...

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