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What Is a Community Development Financial Institution?

Banking
What Is a Community Development Financial Institution?

What happens if you don’t have a bank account but need to cash a check, pay a bill or take out a loan? You might resort to a check cashing store or a payday lender, and end up paying exorbitant fees. To help consumers who don’t fit well in the mainstream banking system, Congress created community development banking in 1994.

Community development banks and credit unions bolster local economies through accessible financial services. Some low-income families don’t have access to basic bank services that most people take for granted. They might be denied loans because their credit histories don’t meet the minimum requirements for scoring by the credit reporting agencies. Community development financial institutions, or CDFIs, offer accessible savings and checking accounts with low fees and features like online banking, ATMs and bill pay.

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Spring Bank is one such institution. It has been operating for nearly a decade in low-income neighborhoods in New York City, which has an estimated 825,000 residents with no bank account. Some don’t use direct deposit or have trouble maintaining the minimum account balances that many banks require in order to avoid paying fees. Before Spring Bank opened, many residents with limited incomes had been relying on check cashers, rent-to-own stores, pawn shops and other high-cost alternatives to mainstream banks.

In fact, when it opened in 2007, Spring Bank was the first bank to locate in the South Bronx in over 25 years, according to the Community Development Bankers Association, a national trade group.

While anybody can open an account there, Spring Bank’s mission is focused on people who would otherwise be locked out of the financial system. CDFIs rely less on credit scores and more on developing long-term relationships with members of the community and helping them gain financial literacy, establish savings goals and build credit.

If you need to borrow $500 but can’t qualify for a conventional bank loan, for example, a payday lender might offer a loan at a predatory interest rate equivalent to 400% a year. At a CDFI bank like Spring Bank, someone lacking a strong conventional credit history might successfully apply for a loan at an 18% interest rate. Instead of having to have a minimum credit score, applicants can often use employment history or proof of income to establish their ability to repay the loan. That can save hundreds of dollars in interest compared with a payday loan.

>> MORE: 5 Important Things to Know About Community Lenders

Because they can obtain funding from U.S. Treasury grants, CDFIs are often able to offer low-cost mortgages for first-time homebuyers and accessible loans for small businesses. For those with poor credit, they can offer small credit-builder loans designed to help consumers establish a good track record of repayments and responsibly rebuild their credit. Extending credit throughout the community helps promote a stable and healthy local economy.

Consumers with no access to credit are disproportionately represented in low-income neighborhoods, but the problem is remarkably widespread. As of 2010, 26 million Americans were “credit invisible,” meaning they didn’t have any credit record at the credit bureaus that prepare credit reports and calculate scores, according to a recent report from the Consumer Financial Protection Bureau. An additional 19 million had credit records that the credit bureaus considered unscorable — because they were too brief to be scored, for example. Together, those groups add up to almost 20% of the adult population.

To find a CDFI bank or credit union in your area, check the state-by-state list below.

ALABAMA
Alabama Teachers Credit Union Gadsden
Bank of York York
Demopolis Federal Credit Union (334)289-4686 Demopolis
First Bank of Linden Linden
Five Star Credit Union Dothan
NRS Community Development Federal Credit Union Birmingham
Phenix Pride Federal Credit Union Phenix City
Bank of Vernon Vernon
Tuscaloosa Credit Union Tuscaloosa
United Bank Atmore
West Alabama Bank Reform

ALASKA
MAC Federal Credit Union Fort Wainwright
Tongass Federal Credit Union Ketchikan

ARIZONA
First American Credit Union Casa Grande
MariSol Federal Credit Union Phoenix
Pyramid Federal Credit Union Tucson

ARKANSAS
Bank of Lake Village Lake Village
FBT Bank & Mortgage Fordyce
Southern Bancorp Bank Arkadelphia

CALIFORNIA
Atchison Village Credit Union (510) 233-3218 Richmond
Bay Federal Credit Union Capitola
Beneficial State Bank Oakland
Broadway Federal Bank Los Angeles
Community Bank of the Bay Oakland
Community Commerce Bank Claremont
Community Credit Union of Southern Humboldt Garberville
Desert Valleys Federal Credit Union Ridgecrest
Episcopal Community Federal Credit Union Los Angeles
First Choice Bank Cerritos
Gateway Bank Oakland
Mendo Lake Credit Union Ukiah
Mission National Bank San Francisco
Mission Valley Bank Sun Valley
Neighborhood National Bank National City
Northeast Community Federal Credit Union San Francisco
Pacoima Development Federal Credit Union Pacoima
Pan American Bank Los Angeles
ProAmerica Bank Los Angeles
Santa Cruz Community Credit Union Santa Cruz
SCE Federal Credit Union Irwindale
Self-Help Federal Credit Union Modesto
Travis Credit Union Vacaville

COLORADO
First Southwest Bank Alamosa
Native American Bank, N.A. Denver

CONNECTICUT
Seasons Federal Credit Union Middletown
Start Community Bank New Haven

DELAWARE
Eagle One Federal Credit Union Claymont
Sussex County Federal Credit Union Seaford

DISTRICT OF COLUMBIA
City First Bank of D.C. Washington
District Government Employees Federal Credit Union Washington
Government Printing Office Federal Credit Union Washington
Industrial Bank Washington

FLORIDA
Baptist Health South Florida Federal Credit Union Miami
Community Trust Federal Credit Union (407) 880-4300 Apopka
Darden Credit Union Orlando
Envision Credit Union Tallahassee
Flag Credit Union Tallahassee
GTE Federal Credit Union Tampa
Innovations FCU Panama City
JetStream Federal Credit Union Miami Lakes
Manatee Community Federal Credit Union Bradenton
Suncoast Credit Union Tampa
Tampa Bay Federal Credit Union Tampa
TMH Federal Credit Union Tallahassee

GEORGIA
Carver State Bank Savannah
Citizens Trust Bank Atlanta
CORE Credit Union Statesboro
Georgia Coastal Federal Credit Union Brunswick

HAWAII
Big Island Federal Credit Union Hilo
Hawaii Federal Credit Union Honolulu
Hawaii First Federal Credit Union Kamuela
Independent Employers Group FCU Hilo
Molokai Community Federal Credit Union Kaunakakai
Prince Kuhio Federal Credit Union Honolulu
The Queen’s Federal Credit Union Honolulu
West Oahu Community FCU Waianae

IDAHO
Latah Federal Credit Union Moscow

ILLINOIS
Community Plus Federal Credit Union Rantoul
CTA C&M Federal Credit Union Oak Park
First Eagle Bank Chicago
Fox Valley Credit Union Aurora
IH Mississippi Valley Credit Union Moline
Illinois Service Federal Savings and Loan Association Chicago
International Bank of Chicago Stone Park
Israel Methcomm FCU (773) 483-0096 Chicago
Members First Credit Union Quincy
North Side Community Federal Credit Union Chicago
Pacific Global Bank Chicago
Pan American Bank Melrose Park
Park Manor Christian Church Credit Union Chicago
Seaway Bank & Trust Company Chicago
South Side Community Federal Credit Union Chicago
Urban Partnership Bank Chicago

INDIANA
Mount Zion Federal Credit Union Indianapolis
Natco Credit Union Richmond
Regional Federal Credit Union Hammond
Sterling United Federal Credit Union Evansville
Union Baptist Church Federal Credit Union (260) 456-1802 Fort Wayne

IOWA
None

KANSAS
CBW Bank Weir
EquiShare Credit Union Wichita

KENTUCKY
Metro Bank Louisville

LOUISIANA
ANECA Federal Credit Union Shreveport
ASI Federal Credit Union Harahan
Bank of Montgomery Montgomery
Caldwell Bank & Trust Columbia
Carter Federal Credit Union Springhill
Centric Federal Credit Union West Monroe
Citizens Progressive Bank Columbia
Commercial Capital Bank Delhi
Concordia Bank and Trust Vidalia
Cottonport Bank Cottonport
Cross Keys Bank Saint Joseph
Delta Bank Vidalia
Essential Federal Credit Union Plaquemine
Fleur de Lis Federal Credit Union Metairie
Florida Parishes Bank Hammond
Heart of Louisiana Credit Union Pineville
Homeland Federal Savings Bank Columbia
Iberville Federal Credit Union Plaquemine
Jefferson Financial Credit Union Metairie
LES Federal Credit Union Baton Rouge
Liberty Bank and Trust Company New Orleans
Louisiana Central Credit Union Harahan
Louisiana Federal Credit Union LaPlace
Monroe Telco Federal Credit Union West Monroe
New Orleans Firemen’s Federal Credit Union Metairie
Pelican State Credit Union Baton Rouge
Red River Mill Employees Federal Credit Union Campti
Richland State Bank Rayville
Shreveport Federal Credit Union Shreveport
Total Community Action Federal Credit Union New Orleans
Tulane-Loyola Federal Credit Union New Orleans
University of Louisiana Federal Credit Union Lafayette
UNO Federal Credit Union New Orleans

MAINE
NorState Federal Credit Union Madawaska

MARYLAND
Harbor Bank of Maryland Baltimore
MECU of Baltimore Baltimore
Securityplus Federal Credit Union Baltimore

MASSACHUSETTS
Athol Credit Union Athol
Greylock Federal Credit Union Pittsfield
OneUnited Bank Boston

MICHIGAN
Alpena Community Credit Union Alpena
CASE Credit Union Lansing
Communicating Arts Credit Union Detroit
Community Choice Credit Union Farmington Hills
Community Promise Federal Credit Union Kalamazoo
Credit Union ONE Ferndale
First Independence Bank Detroit
FM Financial Credit Union Flint
Frankenmuth Credit Union Frankenmuth
OMNI Community Credit Union Battle Creek
Public Service Credit Union Romulus
Settlers Federal Credit Union Bruce Crossing
Shore to Shore Community Federal Credit Union Trenton
Straits Area Federal Credit Union Cheboygan

MINNESOTA
Hermantown Federal Credit Union Hermantown
North Star Credit Union Cook
Sunrise Banks St. Paul
White Earth Reservation Federal Credit Union Mahnomen

MISSISSIPPI
Amory Federal Savings and Loan Association Amory
Bank of Anguilla (662) 873-4346 Anguilla
Bank of Commerce Greenwood
Bank of Kilmichael Kilmichael
Bank of Okolona Okolona
Bank of Winona Winona
BankFirst Financial Services Columbus
BankPlus Belzoni
BNA Bank New Albany
Choctaw Federal Credit Union Choctaw
Citizens Bank Columbia
Citizens Bank Byhalia
Citizens Choice Federal Credit Union Natchez
Citizens National Bank of Meridian Meridian
Commercial Bank DeKalb
Ferguson Federal Credit Union Monticello
First Security Bank Batesville
FNB Oxford Bank Oxford
Guaranty Bank & Trust Belzoni
Gulf Coast Community Federal Credit Union Gulfport
Holmes County Bank and Trust Company Lexington
Hope Credit Union Jackson
Magnolia Federal Credit Union Jackson
Magnolia State Bank Bay Springs
Mechanics Bank Water Valley
Members Exchange Credit Union Ridgeland
Merchants & Planters Bank Raymond
MUNA Federal Credit Union Meridian
Oxford University Bank Oxford
Peoples Bank Mendenhall
Priority One Bank Magee
Richton Bank and Trust Company Richton
RiverHills Bank Port Gibson
Singing River Federal Credit Union Moss Point
State Bank & Trust Company Ridgeland
Sycamore Bank Senatobia
The First Hattiesburg
The Jefferson Bank Greenville
United Mississippi Bank Natchez

MISSOURI
Holy Rosary Credit Union Kansas City
Horizon Credit Union Macon
Joplin Metro Credit Union Joplin
KC Terminal Employees/Guadalupe Center FCU (816) 842-6473 Kansas City
Mercy Credit Union Springfield
Metro Credit Union Springfield
Mid Missouri Credit Union Fort Leonard Wood
Missouri Central Credit Union Lee’s Summit
Northeast Regional Credit Union Hannibal
Ozark Federal Credit Union Poplar Bluff
River Region Credit Union Jefferson City
Riverways Federal Credit Union Rolla
South Central Missouri Credit Union Willow Springs
St. Luke’s Credit Union Kansas City
St. Louis Community Credit Union St. Louis
UBC Credit Union St. Louis
United Consumers Credit Union Independence
United Credit Union Mexico

MONTANA
McCone County Federal Credit Union Circle
Missoula Federal Credit Union Missoula
Mountain West Federal Credit Union Butte
Wolf Point Federal Credit Union Wolf Point

NEBRASKA
None

NEVADA
None

NEW HAMPSHIRE
None

NEW JERSEY
New Community Federal Credit Union Newark
North Jersey Federal Credit Union Totowa
Renaissance Community Development Credit Union Somerset

NEW MEXICO
Guadalupe Credit Union Santa Fe
High Plains Federal Credit Union Clovis
Rio Grande Credit Union Albuquerque

NEW YORK
Fidelis Federal Credit Union (212) 234-4121 New York
First American International Bank Brooklyn
Genesee Co-Op Federal Credit Union Rochester
Lexington Ave Federal Credit Union Rochester
Love Gospel Assembly Federal Credit Union Bronx
Lower East Side People’s Federal Credit Union New York
Neighborhood Trust Federal Credit Union New York
New York University Federal Credit Union New York
Queens Cluster Federal Credit Union (718) 983-1796 Hicksville
Quontic Bank Astoria
Savoy Bank New York
Southern Chautauqua Federal Credit Union Lakewood
Spring Bank Bronx
Syracuse Cooperative Federal Credit Union Syracuse

NORTH CAROLINA
First Legacy Community Credit Union Charlotte
Greater Kinston Credit Union Kinston
Latino Community Credit Union Durham
Local Government Federal Credit Union Raleigh
M&F Bank Durham
Self-Help Credit Union Durham
Self-Help Federal Credit Union Durham
Vision Financial FCU Durham

NORTH DAKOTA
None

OHIO
Nueva Esperanza Community Credit Union (419) 720-9530 Toledo
Toledo Urban Federal Credit Union Toledo

OKLAHOMA
Bank2 Oklahoma City
Bank of Cherokee County Tahlequah
Focus Federal Credit Union Oklahoma City
My Choice Federal Credit Union Tulsa
Security State Bank Wewoka

OREGON
Albina Community Bank Portland
Cascade Community Federal Credit Union Roseburg
Cutting Edge Federal Credit Union Milwaukie
Maps Credit Union Salem
Mid Oregon Federal Credit Union Bend
Pacific Crest Federal Credit Union Klamath Falls
Point West Credit Union Portland
SELCO Community Credit Union Eugene

PENNSYLVANIA
Noah Bank Elkins Park
Parkview Community Federal Credit Union McKeesport
United Bank of Philadelphia Philadelphia

RHODE ISLAND
None

SOUTH CAROLINA
Carolina Foothills Federal Credit Union Spartanburg
CommunityWorks Federal Credit Union Greenville
Greater Abbeville Federal Credit Union Abbeville
Greenville Heritage Federal Credit Union Greenville
Health Facilities Federal Credit Union Florence
SC Telco Federal Credit Union Greenville
SAFE Federal Credit Union Sumter
Security Federal Bank Aiken
South Carolina Community Bank Columbia

SOUTH DAKOTA
Dakota Plains Federal Credit Union Lemmon
Lakota Federal Credit Union Kyle
Sentinel Federal Credit Union Rapid City

TENNESSEE
Appalachian Community Federal Credit Union Gray
Bradley Initiative Credit Union Cleveland
Citizens Savings Bank and Trust Nashville
First Kingsport Credit Union Kingsport
Orion Federal Credit Union Memphis
Tri-State Bank of Memphis Memphis
Trust Federal Credit Union Chattanooga
US Community Credit Union Nashville

TEXAS
Associated Credit Union of Texas League City
Border Federal Credit Union Del Rio
Caprock Federal Credit Union Lamesa
Coastal Community FCU Galveston
First Light Federal Credit Union El Paso
GECU El Paso
Golden Bank Houston
Houston Metropolitan Federal Credit Union Houston
Kerr County Federal Credit Union Kerrville
Kingsville Community Federal Credit Union Kingsville
One Source Federal Credit Union El Paso
Promise Credit Union Houston
River City Federal Credit Union San Antonio
Select Federal Credit Union San Antonio
Southwest 66 Credit Union Odessa

UTAH
Provo Postal Credit Union Provo

VERMONT
Northern Lights Credit Union St. Johnsbury
 Opportunities Credit Union  Winooski

VIRGINIA
DuPont Community Credit Union Waynesboro
Fairfax County Federal Credit Union Fairfax
First State Bank Danville
Freedom First Federal Credit Union Roanoke
Halifax County Community Federal Credit Union South Boston
Virginia Community Capital Christiansburg
Virginia Credit Union Richmond
Virginia State University Federal Credit Union Ettrick

WASHINGTON
CALCOE Federal Credit Union Yakima
Express Credit Union Seattle
Industrial Credit Union Bellingham
Lighthouse Community Credit Union Vancouver
Lower Valley Credit Union Sunnyside
Newrizons Federal Credit Union Hoquiam
North Coast Credit Union Bellingham
Peninsula Credit Union Shelton
TULIP Cooperative Credit Union Olympia

WEST VIRGINIA
Northern Hancock Bank & Trust Newell
The United Federal Credit Union Morgantown

WISCONSIN
Brewery Credit Union Milwaukee
CoVantage Credit Union Antigo
Mitchell Bank Milwaukee
North Milwaukee State Bank Milwaukee
Royal Credit Union Eau Claire

WYOMING
None

Jeanne Lee is a staff writer at NerdWallet, a personal finance website. Email: jlee@nerdwallet.com. Twitter: @jlee_jeanne. 


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