OFN’s first research publication of 2017, 20 Years of CDFI Banks and Credit Unions, 1996-2015: An Analysis of Trends and Growth, is a companion piece to 2015’s longitudinal study of OFN Member CDFI loan funds.
Focusing on low-income and other underserved communities, CDFI banks and credit unions often take on what appear to be riskier loans, yet results show CDFI banks’ portfolio performance was consistently on par with, or better than, all banks, even during the Great Recession. Although CDFI credit unions’ portfolio performance was historically not as strong as all credit unions, their performance tracked much closer to all credit unions during the Great Recession and through 2015.
While CDFI banks and credit unions comprise a very small share of all depository institutions, this study shows that the number of CDFI-certified banks and credit unions grew dramatically from 48 in 1996 to 361 in 2015. Due to a pronounced trend (starting around 2004) in much larger institutions becoming CDFI-certified, average assets among CDFI banks and credit unions increased from $23 million in 1996 to $60 million in 2004, and then surged to $251 million in 2015.
CDFI banks and credit unions are much more likely to be led by people of color than conventional institutions, at 34% compared to 3% of all banks and 13% of all credit unions. Findings also show that CDFI banks and credit unions offer financial services that are particularly relevant to low- to moderate-income communities at substantially higher rates than conventional banks and credit unions.
To explore this report in full detail, please download a free copy here.
OFN would like to thank Capital One for funding this research, as well as the Community Development Bankers Association and the National Federation of Community Development Credit Unions for their invaluable comments on drafts of this report and suggestions for future research topics.