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Community development bank (CDB) or Community Development Financial Institution (CDFI) is a
development bank A development financial institution (DFI), also known as a development bank or development finance company (DFC), is a financial institution that provides risk capital for economic development projects on a non-commercial basis. , total commitm ...
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, provis ...
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 bank ...
or
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 servic ...
in deprived local communities. They emphasize the long term development of communities and provide loans such as
micro-finance Microfinance is a category of financial services targeting individuals and small businesses who lack access to conventional banking and related services. Microfinance includes microcredit, the provision of small loans to poor clients; savings ...
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 Washin ...
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 Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...
, 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 ...
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 ...
. 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 nat ...
, 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 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 ...
. 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. Banking serv ...
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 regulate ...
, 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 South is one of the cardinal directions or compass points. The direction is the opposite of north and is perpendicular to both east and west. Etymology The word ''south'' comes from Old English ''sūþ'', from earlier Proto-Germanic ''*sunþa ...
and West sides,
Cleveland Cleveland ( ), officially the City of Cleveland, is a city in the United States, U.S. U.S. state, state of Ohio and the county seat of Cuyahoga County, Ohio, Cuyahoga County. Located in the northeastern part of the state, it is situated along ...
, 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 t ...
. 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 ( bn, গ্রামীণ ব্যাংক) is a microfinance organisation and community development bank founded in Bangladesh. It makes small loans (known as microcredit or "grameencredit") to the impoverished without requi ...
of
Bangladesh Bangladesh (}, ), officially the People's Republic of Bangladesh, is a country in South Asia. It is the eighth-most populous country in the world, with a population exceeding 165 million people in an area of . Bangladesh is among the mo ...
is a
microfinance Microfinance is a category of financial services targeting individuals and small businesses who lack access to conventional banking and related services. Microfinance includes microcredit, the provision of small loans to poor clients; savings ...
organization and community development bank founded by
Muhammad Yunus Muhammad Yunus (born 28 June 1940) is a Bangladeshi social entrepreneur, banker, economist and civil society leader who was awarded the Nobel Peace Prize for founding the Grameen Bank and pioneering the concepts of microcredit and microfinance ...
. 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, Physiolo ...
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 ...
in
Oakland, CA Oakland is the largest city and the county seat of Alameda County, California, United States. A major West Coast port, Oakland is the largest city in the East Bay region of the San Francisco Bay Area, the third largest city overall in the Bay ...
* Carver Federal Savings Bank in
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 census, the city had a population of 508,090 in 2020, making it the 36th most-populous city in the United States. It is the central ...

City First Bank of D.C.
in Washington, D.C.
First NBC Bank
in
New Orleans, LA New Orleans ( , ,New Orleans
Hope Community Credit Union
in
Jackson, MS Jackson, officially the City of Jackson, is the capital of and the most populous city in the U.S. state of Mississippi. The city is also one of two county seats of Hinds County, along with Raymond. The city had a population of 153,701 at th ...

Liberty Bank & Trust
in
New Orleans, LA New Orleans ( , ,New Orleans
Louisville Community Development Bank
in
Louisville, KY Louisville ( , , ) is the largest city in the Commonwealth of Kentucky and the 28th most-populous city in the United States. Louisville is the historical seat and, since 2003, the nominal seat of Jefferson County, on the Indiana border. ...

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 m ...
,
Oregon Oregon () is a U.S. state, state in the Pacific Northwest region of the Western United States. The Columbia River delineates much of Oregon's northern boundary with Washington (state), Washington, while the Snake River delineates much of it ...
, and
Washington Washington commonly refers to: * Washington (state), United States * Washington, D.C., the capital of the United States ** A metonym for the federal government of the United States ** Washington metropolitan area, the metropolitan area centered o ...
*
Southern Bancorp Southern Bancorp is a community development financial institution headquartered in Arkadelphia, Arkansas. It was founded in 1986 as Southern Development Bancorporation, and is often referred to simply as "Southern". With 43 locations, the orga ...
in Arkadelphia, AR
University National Bank
in
St. Paul, MN Saint Paul (abbreviated St. Paul) is the capital of the U.S. state of Minnesota and the county seat of Ramsey County. Situated on high bluffs overlooking a bend in the Mississippi River, Saint Paul is a regional business hub and the center ...
*
OneUnited Bank OneUnited Bank is an African-American-owned and managed Massachusetts-chartered trust company headquartered in Boston, Massachusetts. It is also registered by the Federal Deposit Insurance Corporation (FDIC), and certified as a community develop ...
in
Boston, MA Boston (), officially the City of Boston, is the state capital and most populous city of the Commonwealth of Massachusetts, as well as the cultural and financial center of the New England region of the United States. It is the 24th- most ...
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