Community Development Bank (CDB)

Definition

The term community development bank refers to financial institutions that support the economic growth in low-to-moderate income areas.  Community development banks are certified by the Community Development Financial Institution Fund.

Explanation

Also referred to as community development financial institution banks (CDFI), community development banks are certified by the federal government.  That certification includes a requirement that the mission of these banks is to promote and increase the level of economic development in areas designated as serving low-to-moderate income families.

Community development banks can be established through state or national bank charters. That charter will identify the low-to-middle income geographies to be served by the bank.  Oftentimes these areas are underserved by the financial community due to the economic challenges they face.  While many banks may operate with a mission to serve these communities, not all of these financial institutions are certified as a CDFI by the Community Development Financial Institution Fund.

Related Terms

Regulation Y, postal savings bank, offshore bank, universal bank, Islamic bank