The FDIC has produced a resource guide, Strategies for Community Banks to Develop Partnerships with Community Development Financial Institutions, to help FDIC-supervised institutions meet community credit and development needs and receive consideration under the Community Reinvestment Act (CRA).
The purpose of the guide is to provide information that will help community banks identify and evaluate opportunities to collaborate with community development financial institutions (CDFIs).
CDFIs are specialized financial institutions that provide financial products and services to populations and businesses located in underserved markets. CDFIs include banks and bank holding companies, as well as credit unions, loan funds, and venture capital funds.
Through partnerships with CDFIs, banks can expand their ability to meet the capital and credit needs in low- and moderate-income communities within a bank’s assessment areas. Any investment in or loan to a CDFI should be predicated on appropriate due diligence and in accordance with prudent banking principles.
FDIC Strategies for Community Banks to Develop Partnerships with Community Development Financial Institutions –Entire Report – (PDF 3.8 MB)
Executive Summary – (PDF 42.1 KB)
Section I – Introduction – (PDF 35 KB)
This section describes the purpose of the guide and provides a historical overview of the CDFI industry.
Section II – CDFI Organizational Structures – (PDF 51 KB)
Section II examines key characteristics, including legal structure, regulatory oversight, and lending and investment opportunities, associated with the various types of CDFIs.
Section III – Financing Approaches – (PDF 42 KB)
This section describes the types of investments that can support CDFIs.
Section IV – Evaluation of Bank/CDFI Partnership Opportunities – (PDF 76 KB)
This section discusses the steps that might be considered in assessing a bank/CDFI partnership.
Section V – Regulatory Context and Bank/CDFI Partnerships – (PDF 70 KB)
This section explains possible ways that CDFIs may be a useful tool or means to help banks meet the CRA lending, investment, and service test criteria. It also provides information on the requirements for “qualified investments” under CRA, particularly guidance on public welfare investments.
Section VI – Case Examples of Partnership Options – (PDF 2.78 MB)
This section provides case examples of bank/CDFI partnerships gathered from a review of CRA evaluations prepared by the FDIC. The case examples illustrate some of the most common types of partnership arrangements, but they do not cover the full range of bank/CDFI partnerships. The particular form a bank/CDFI partnership takes depends on a bank’s business strategy, market needs, capacity of the CDFI partner, and partnership goals.