Community Development Banking in the United States

In the United States

United States

The United States of America is a federal constitutional republic comprising fifty states and a federal district...

, community development banks (CDBs or CDFI Banks) are commercial banks

Bank

A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...

 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

Community Development Financial Institutions Fund

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

, a department within the U.S. Department of the Treasury.

CDFI Certification

In order to become a certified CDFI, CD Banks must apply to the United States Community Development Financial Institutions Fund

Community Development Financial Institutions Fund

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

. 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

Retail banking is banking in which banking institutions execute transactions directly with consumers, rather than corporations or other banks. Services offered include: savings and transactional accounts, mortgages, personal loans, debit cards, credit cards, and so forth.-Types of...

 services, they usually target customers from "financially underserved" demographics.

While community development banks are one type of community development financial institution

Community development financial institution

Community development financial institutions are financial institutions which provide credit and financial services to underserved markets and populations, primarily in the USA but also in the UK...

, or CDFI, some organizations use the terms interchangeably. grants official certification of CDFI status to eligible CDBs.

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

Office of the Comptroller of the Currency

The Office of the Comptroller of the Currency is a US federal agency established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and the federal branches and agencies of foreign banks in the United States...

, 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.

Notable community development banks

One of the best known community development banks was ShoreBank

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 bank holding company.ShoreBank had branches in...

, founded in Chicago

Chicago

Chicago is the largest city in the US state of Illinois. With nearly 2.7 million residents, it is the most populous city in the Midwestern United States and the third most populous in the US, after New York City and Los Angeles...

 in 1973. ShoreBank had branches in Chicago’s South

South Side (Chicago)

The South Side is a major part of the City of Chicago, which is located in Cook County, Illinois, United States. Much of it has evolved from the city's incorporation of independent townships, such as Hyde Park Township which voted along with several other townships to be annexed in the June 29,...

 and West sides, Cleveland, and Detroit. 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

The Grameen Bank is a microfinance organization and community development bank started in Bangladesh that makes small loans to the impoverished without requiring collateral...

of Bangladesh

Bangladesh

Bangladesh , officially the People's Republic of Bangladesh is a sovereign state located in South Asia. It is bordered by India on all sides except for a small border with Burma to the far southeast and by the Bay of Bengal to the south...

 is a microfinance

Microfinance

Microfinance is the provision of financial services to low-income clients or solidarity lending groups including consumers and the self-employed, who traditionally lack access to banking and related services....

 organization and community development bank founded by Muhammad Yunus

Muhammad Yunus

Muhammad Yunus is a Bangladeshi economist and founder of the Grameen Bank, an institution that provides microcredit to help its clients establish creditworthiness and financial self-sufficiency. In 2006 Yunus and Grameen received the Nobel Peace Prize...

. The bank has grown into a family of over two dozen

Grameen family of organizations

The Grameen family of organizations has grown beyond Grameen Bank into a multi-faceted group of profitable and non-profit ventures, established by Dr. Muhammad Yunus, the Nobel Peace Prize winning founder of Grameen Bank. Most of these organizations have central offices at the Grameen Bank Complex...

 for-profit and nonprofit enterprises including the Grameen Foundation, and the Grameen Bank and its founder were awarded the Nobel Peace Prize

Nobel Peace Prize

The Nobel Peace Prize is one of the five Nobel Prizes bequeathed by the Swedish industrialist and inventor Alfred Nobel.-Background:According to Nobel's will, the Peace Prize shall be awarded to the person who...

 in 2006.

Other CDBs in the United States include:

• Albina Community Bank in Portland, OR
• Carver Federal Savings Bank in New York, NY
• Central Bank of Kansas City in Kansas City, MO
• City First Bank of D.C. in Washington, D.C.
  Washington, D.C.
  Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....
  
  
• Dryades Savings Bank in New Orleans, LA
• Hope Community Credit Union in Jackson, MS
• Liberty Bank & Trust in New Orleans, LA
• Louisville Community Development Bank in Louisville, KY
  Louisville, Kentucky
  Louisville is the largest city in the U.S. state of Kentucky, and the county seat of Jefferson County. Since 2003, the city's borders have been coterminous with those of the county because of a city-county merger. The city's population at the 2010 census was 741,096...
  
  
• Neighborhood National Bank in San Diego, CA
• One PacificCoast Bank in California, Oregon, Washington
• Southern Bancorp in Arkadelphia, AR
• University National Bank in St. Paul, MN
• OneUnited Bank in Boston, MA