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In the United States, community development banks (CDBs or CDFI Banks) are commercial banks 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.
In order to become a certified 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[1]. CDFI Banks provide retail banking services, they usually target customers from "financially underserved" demographics.
While community development banks are one type of community development financial institution, or CDFI,[2] 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, 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.
One of the best known community development banks was ShoreBank, founded in Chicago in 1973.[3] ShoreBank had branches in Chicago’s South 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 of Bangladesh 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 in 2006.
Other CDBs in the United States include: