FDIC Quarterly 33 2014, Volume 8, No. 3

Defining Minority Depository Institutions and 

Community Development Financial Institutions

Minority and community development financial institutions are time-honored institutional forms. Over time, 

both Congressional and Executive actions have been 

taken to clearly define these institutional forms. In 

particular, Congress enacted laws to provide a designation process for MDIs, as well as a certification process 

for CDFIs. Institutions that meet these definitions may 

benefit from programs created to support their provision 

of financial services to underserved consumers and 

communities.

In relation to more than 6,800 FDIC-insured financial 

institutions, the number of MDIs and insured institutions that are certified as CDFI banks is quite small. 

Only 2.6 percent of insured institutions are currently 

designated as MDIs, while 1.1 percent of insured institutions are certified as CDFIs (in addition to the CDFIs 

that are not federally insured depository institutions). 

MDIs carry a number of different minority designations, with half of MDIs designated as Asian or Pacific 

Islander American (Asian American), followed by a 

large share of MDIs with a Hispanic American minority status.

A review of financial data indicates that the characteristics of MDI balance sheets generally resemble those of 

community banks, with a reliance on core deposits to 

fund loans that are mostly related to residential and 

commercial real estate, although an increasing percentage of MDIs have specialized in commercial real estate 

lending over time.

The Geography of MDIs and CDFI Banks

Minority depository institutions are naturally linked to 

geographic areas that reflect the communities they seek 

to serve. As a result, most MDIs are headquartered in a 

handful of the most populous states. In addition, a large 

majority of the headquarters and branch offices of these 

institutions are located in large metropolitan areas. 

Owing to the concentration of MDI headquarters and 

branch offices in large metro areas, MDIs generally hold 

a relatively small market share, except in a few large 

counties such as Los Angeles and Miami-Dade. Minority depository institutions also hold a sizable share of 

deposits in a number of micropolitan and rural counties. The concentration of MDI offices in a limited 

number of metropolitan areas is likely due to the 

Introduction and Executive Summary

In the fall of 2011, the Federal Deposit Insurance 

Corporation (FDIC) announced a Community Banking 

Initiative focused on understanding the evolution of 

U.S. community banks over the past 25 years and the 

challenges and opportunities faced by this segment of 

the banking industry. Under this initiative, the FDIC 

hosted roundtable discussions across the country; 

undertook a review of its examination, rulemaking, and 

guidance processes; developed a technical assistance 

video program for bank directors, officers, and employees; and completed the FDIC Community Banking 

Study.

1

 In 2013, FDIC Chairman Martin Gruenberg 

announced that the FDIC would undertake a similar 

study of minority depository institutions (MDIs) and 

FDIC-insured community development financial institutions (CDFIs).2

Chairman Gruenberg described the important mission 

of MDIs and FDIC-insured CDFIs by noting, “Minority 

and CDFI banks play a vital role. Your mission is 

important. You provide responsible banking services 

to those who might not otherwise have access to a 

bank. And, you serve some of the most challenging 

markets in the country. One way we can contribute to 

your efforts is by conducting research specifically on 

MDI and CDFI institutions—to better understand the 

role they play in our financial system and in our 

communities.”

This study carries out this goal by building on analytical 

work discussed at the June 2013 Interagency MDI/CDFI 

Bank Conference, starting with a description of MDIs 

and FDIC-insured CDFIs and where these institutions 

are located. The remainder of the study is primarily 

focused on MDIs, for which the FDIC has historical 

data, exploring how this segment of the financial 

services industry has changed over time, how MDIs 

have performed financially, and the extent to which 

MDIs have achieved their mission in serving the needs 

of their community. It is important to note that when 

discussing CDFIs, the report focuses on the small share 

of CDFIs that are FDIC-insured, rather than all CDFIs.

1 FDIC Community Banking Study, December 2012, http://www.fdic.

gov/regulations/resources/cbi/study.html. 2

 Interagency MDI/CDFI Bank Conference proceedings—Strategies for 

Success through Collaboration, June 11, 2013, http://www.fdic.gov/

regulations/resources/minority/events/interagency2013/agenda2.html.

Minority Depository Institutions: 

Structure, Performance, and Social Impact
FDIC Quarterly 34 2014, Volume 8, No. 3

Social Impact of MDIs

Financial performance is not the only bottom line for 

MDIs. As noted in the FDIC policy statement regarding 

minority depository institutions, these organizations 

often promote the economic viability of minority and 

underserved communities, namely populations that are 

underserved by mainstream financial institutions. The 

study finds that MDIs have much to show for their 

efforts in reaching these populations. Compared with 

community banks, the markets served by MDI offices 

include a higher share of population living in low- or 

moderate-income (LMI) census tracts, as well as a 

higher share of minority populations. In addition, 

among institutions that reported data under the Home 

Mortgage Disclosure Act (HMDA), MDIs originated a 

larger share of their mortgages to borrowers who live in 

LMI census tracts and to minority borrowers than did 

non-MDI community banks. These findings indicate a 

significant degree of success by MDIs in serving the 

purpose that this segment of the banking industry was 

intended to achieve.

Section 1. Defining Minority Depository and 

Community Development Financial Institutions

MDIs

Minority depository institutions (MDIs) are a timehonored institutional form, with the earliest minorityowned banks dating back as far as 1866.3

 Yet, over time, 

there has been a growing recognition that more must be 

done to meet the financial needs of minority communities. Among many responsibilities, the FDIC has long 

played an important role in implementing measures to 

expand access to mainstream banking products and 

services.

There has been a series of legislative and regulatory 

actions designed to promote access to financial services 

on the part of underserved populations. Beginning in 

the 1960s, Congress enacted a number of consumer 

protection laws, including the Consumer Credit 

Protection Act of 1968 and the Equal Credit Opportunity Act of 1974. Congress also enacted laws designed 

to ensure that financial institutions serve all segments 

of their local communities. One of these laws, the 

Community Reinvestment Act (CRA) of 1977, “is 

intended to encourage depository institutions to help 

meet the credit and development needs of their 

3

 See Douglas A. Price, “Minority-Owned Banks: History and Trends,” 

Economic Commentary, Federal Reserve Bank of Cleveland, 1991, 

http://www.clevelandfed.org/research/commentary/1990/0701.pdf.

relatively small geographic footprint of MDIs, with 

most locating all of their banking offices in three counties or less. In addition, with the exception of several 

large Hispanic American MDIs, most MDIs have a 

small number of offices.

FDIC-insured institutions that are certified as CDFIs, 

but are not MDIs, tend to be concentrated in Mississippi, Illinois, and California, with more than half of 

their total banking offices in Mississippi alone. Finally, 

unlike MDIs, only about half of these FDIC-insured 

CDFIs are located in metropolitan areas.

Structural Change Among MDIs

Like other types of banks, the MDI banking segment 

has experienced significant structural change over time. 

The number of MDI charters has fluctuated, owing to 

a number of factors, including institutions being newly 

designated as MDIs, existing MDIs being acquired by 

other institutions, failing MDIs, and the chartering of 

new MDIs. Compared with the industry overall, and 

especially community banks, MDIs have experienced 

a greater degree of structural volatility, with relatively 

few MDIs operating continuously throughout our 

2001–2013 study period. The composition of the 

MDI segment has also changed over time, with the 

share of Asian American MDIs increasing, and the 

share of African American MDIs declining.

Financial Performance of MDIs

The wide size variation among MDIs, in addition to 

the significant amount of structural change in this 

segment, makes long-term group comparisons of MDI 

performance difficult. Nonetheless, MDIs appear to 

underperform non-MDI institutions in terms of standard industry measures of financial performance such 

as pretax return on assets. MDIs were found to perform 

much like community banks with regard to net interest 

income and noninterest income, but generally experienced higher expenses related to problem loans, as 

well as higher overhead expenses. Smaller MDIs, 

especially, were found to have much higher noninterest expenses compared with larger MDIs and community banks. In addition, smaller MDIs also were found 

to be less efficient than both midsize and larger MDIs, 

as well as non-MDI community and noncommunity 

banks. Several factors may contribute to these differences in performance, including the concentration of 

MDIs in metropolitan areas and the relatively young 

age of MDIs.
FDIC Quarterly 35 2014, Volume 8, No. 3

Minority Depository Institutions

communities, especially the needs of low- and moderate-income neighborhoods or persons, small businesses, 

and small farms.”4

In addition to legislative actions, various administrations have issued executive orders that provided federal 

assistance to institutions that serve minority communities. As a result of two executive orders issued in 1969 

and 1971, the Commerce and Treasury Departments 

established the Minority Bank Deposit Program. Financial institutions that participated in this program were 

recognized as minority banks, and private and public 

sector organizations were encouraged to obtain services 

from these institutions.

After turmoil in the financial services industry in the 

1980s and early 1990s resulted in the failure of 

hundreds of banks and savings institutions, including 

some minority banks, Congress enacted the Financial 

Institution Reform, Recovery, and Enforcement Act 

(FIRREA) of 1989. FIRREA established several important goals with respect to MDIs, including to preserve 

the number of minority depository institutions, 

preserve the minority character in cases of merger or 

acquisition, provide technical assistance to prevent 

insolvency of institutions not now insolvent, promote 

and encourage creation of new minority depository 

institutions, and provide for training, technical assistance, and education programs.

With the enactment of FIRREA, the MDI designation 

also became somewhat more structured. FIRREA 

defines an MDI as “any depository institution where 51 

percent or more of the stock is owned by one or more 

socially and economically disadvantaged individuals.” 

The FDIC further interpreted FIRREA’s definition in 

its 2002 Policy Statement on MDIs not only to include 

federally insured depository institutions where 51 

percent or more of the voting stock is owned by minority individuals, but to also allow insured depository 

institutions to choose MDI status if a majority of the 

Board of Directors is minority individuals and the 

community that the institution serves is predominantly 

minority.5

 As noted in the policy statement, institutions 

that are not already identified as minority depository 

institutions can request to be designated as such by 

certifying that they meet the above definition.

4

 Kenneth Spong, Banking Regulation, Federal Reserve Bank of Kansas 

City, 2000.

5

 FDIC Policy Statement Regarding Minority Depository Institutions, 

2002, http://www.fdic.gov/regulations/resources/minority/sop5-only.pdf.

Although seeking designation as a minority depository 

institution is voluntary, because of the goals established 

in FIRREA, MDIs may benefit from technical assistance, training, and educational programs provided by 

the banking regulatory agencies that are unavailable to 

other insured depository institutions. In addition, under 

the Community Reinvestment Act (CRA), non-MDI 

financial institutions may be encouraged to provide 

support to MDIs to meet the requirements of the act 

with respect to the lending, investment, and service 

tests. As noted in Part 345 of the FDIC’s rule implementing CRA, when assessing the CRA performance of 

a bank, the FDIC considers as a factor capital investment, loan participation, and other ventures undertaken by the bank in cooperation with minority- and 

women-owned financial institutions and low-income 

credit unions. Such activities must help meet the credit 

needs of local communities in which the minority- and 

women-owned financial institutions and low-income 

credit unions are chartered. However, to be considered, 

such activities do not need to also benefit the bank’s 

assessment area(s) or the broader statewide or regional 

area that includes the bank’s assessment area(s).6

CDFIs

Community development financial institutions were 

defined by congressional action under the 1994 Riegle 

Community Development and Regulatory Improvement Act. Whereas MDIs are, by definition, insured 

depository institutions, CDFIs may take on any number 

of different institutional forms as long as their primary 

mission involves supporting economic growth through 

investments that promote the long-term economic and 

social viability of a defined investment area or targeted 

population.7 For example, a certification process 

managed by the U.S. Department of the Treasury’s 

Community Development Financial Institutions Fund 

classifies CDFIs as those specialized financial institutions that work in market niches underserved by traditional financial institutions. CDFIs include both 

regulated institutions such as banks and credit unions, 

and nonregulated institutions such as loan and venture 

capital funds. (For additional information on CDFIs, 

see inset box.)

As a result of these overlapping designations, an insured 

depository institution may become certified as a CDFI 

6

 12 CFR § 345.21(f) [60 FR 22201, May 4, 1995, as amended at 75 

FR 61045, Oct. 4, 2010].

7

 Riegle Community Development and Regulatory Improvement Act of 

1994, Title 1, Section 103.
FDIC Quarterly 36 2014, Volume 8, No. 3

Under Title 1 of the Riegle Community Development 

and Regulatory Improvement Act of 1994, Congress 

established community development financial institutions (CDFIs) and the CDFI Fund. Under the act, a 

CDFI is defined as an entity that has a primary mission 

of promoting community development; serves an investment area or targeted population; provides development 

services in conjunction with equity investments or 

loans, directly or through a subsidiary or affiliate; maintains, through representation on its governing board or 

otherwise, accountability to residents of its investment 

area or targeted population; and is not an agency or 

instrumentality of the United States, or of any state or 

political subdivision of a state.

Section 102 of the act states that Congress finds that:

1. Many of the Nation’s urban, rural, and Native American communities face critical social and economic 

problems arising in part from the lack of economic 

growth, people living in poverty, and the lack of 

employment and other opportunities;

2. The restoration and maintenance of the economies 

of these communities will require coordinated development strategies, intensive supportive services, and 

increased access to equity investments and loans 

for development activities, including investment in 

businesses, housing, commercial real estate, human 

development, and other activities that promote the 

long-term economic and social viability of the 

community; and

3. Community development financial institutions have 

proven their ability to identify and respond to 

community needs for equity investments, loans, and 

development services.

Section 102 also states that the purpose of the act is to 

create a Community Development Financial Institutions Fund to promote economic revitalization and 

community development through investment in and 

assistance to community development financial institutions, including enhancing their liquidity.

CDFI certification is a designation conferred by the 

CDFI Fund and is a requirement for accessing financial 

and technical award assistance through a wide range of 

programs, including:

• CDFI Program: Provides Financial Assistance and 

Technical Assistance awards to certified and emerging CDFIs to sustain and expand their services and to 

build their technical capacity.

• Native Initiatives: Includes the Native American 

CDFI Assistance Program, which provides Financial 

Assistance and Technical Assistance awards to 

CDFIs serving Native American communities to 

sustain and expand their services and to build their 

technical capacity, and training opportunities for 

native CDFIs as part of the CDFI Fund’s Capacity 

Building Initiative.

• New Markets Tax Credit Program: Provides tax 

allocation authority to certified community development entities (CDEs), enabling investors to claim 

tax credits against their federal income taxes. The 

CDEs in turn use the capital raised to make investments in low-income communities.

• Capacity Building Initiative: Provides organizations 

certified as CDFIs or trying to become CDFIs with 

access to free seminars, market research and analysis, 

tools, and one-on-one training to help develop, 

diversify, and grow.

• CDFI Bond Guarantee Program: Guarantees the 

full amount of notes or bonds issued to support 

CDFI  banks that make investments for eligible 

community or economic development purposes. 

These bonds or notes support CDFI bank lending 

and investment by providing a source of long-term, 

patient capital.

In addition, any FDIC-insured depository institution, 

regardless of whether it is certified as a CDFI, may 

participate in the CDFI Fund’s Bank Enterprise Award 

(BEA Award) program if they pursue qualified activities 

in economically distressed communities.

 For more information on certified CDFI banks, including 

eligibility requirements, please visit www.CDFIfund.gov.

Community Development Financial Institutions
FDIC Quarterly 37 2014, Volume 8, No. 3

Minority Depository Institutions

met the definition of a community bank as outlined 

in the 2012 FDIC Community Banking Study (see 

Chart 1.1). The remaining 499 FDIC-insured institutions are referred to as noncommunity banks. By way of 

comparison, some 88 percent of MDIs and 97 percent 

of FDIC-insured CDFIs also met the community bank 

definition at year-end 2013.

A closer examination of these entities reveals that the 

number of MDIs and FDIC-insured CDFIs is quite small 

compared with the universe of FDIC-insured institutions (see Chart 1.2). As of year-end 2013, 174 insured 

without also being designated an MDI. Similarly, not 

all MDIs are also certified as CDFIs, although some are 

certified as both.

MDIs and CDFI Banks in Context

When considered in the context of all FDIC-insured 

institutions, MDIs and FDIC-insured CDFIs have a 

number of similarities to the much larger industry 

segment commonly referred to as community banks. 

Among the 6,812 FDIC-insured institutions that 

reported at year-end 2013, some 6,313, or 93 percent, 

Source: FDIC, U.S. Department of the Treasury.

MDIs = 174

0

114

37

19

39

CDFIs

37

Noncommunity

Banks

499

Community Banks

6,313

2

See break-out in Chart 1.2

Number of Institutions

FDIC-Insured Institutions 6,812

FDIC-Insured MDIs 174

FDIC-Insured MDI-CDFIs 41

FDIC-Insured CDFIs (non-MDI) 37

Non-Bank CDFIs 732

Non-Bank CDFIs

732

MDIs (non-CDFI)

133

MDIs and CDFI Banks in the Wider World of FDIC-Insured Institutions, Year-End 2013

MDI-CDFIs

41

Chart 1.1

How FDIC-Insured MDIs and CDFIs Overlap, Year-End 2013

19 Institutions

$121.6 Billion in Assets

Source: FDIC, U.S. Department of the Treasury.

Note: Community and Noncommunity banks are defined per the FDIC Community Banking Study.

Noncommunity Banks Community Banks

114 Institutions

$50.0 Billion in Assets

2 Institutions

$0.4 Billion in Assets

0 Institutions

39 Institutions

$9.3 Billion in Assets

37 Institutions

$13.9 Billion in Assets

MDIs

174 Institutions

$181 Billion in Assets

1,793 Banking Offices CDFIs

78 Institutions

$24 Billion in Assets

534 Banking Offices

Number of Institutions

FDIC-Insured MDIs 133

FDIC-Insured MDI-CDFIs 41

FDIC-Insured CDFIs (non-MDI) 37

Chart 1.2

http://www.fdic.gov/regulations/resources/cbi/study.html.
FDIC Quarterly 38 2014, Volume 8, No. 3

back to year-end 2001, which results in a study period 

that encompasses 13 years.

During the study period, the number of MDIs increased 

from 164 to 174 and their assets more than doubled, 

from $83 billion to $181 billion. While there are 22 

MDIs with assets greater than $1 billion, most MDIs are 

relatively small. The median MDI held $198 million in 

total assets at year-end 2013, compared with $159 

million in total assets at the median community bank.

In addition to their relatively small size, MDIs also tend 

to be younger institutions than non-MDIs. At year-end 

2013, the median age of an MDI charter was 28 years, 

compared with 90 years for community banks (see 

Chart 1.3). Nearly one in five community bank charters 

were established before 1900, compared with only two 

of the 174 MDI charters that reported in 2013.

Most MDIs are owned or managed by individuals from 

a specific minority group. Thus MDIs may be designated as having a minority status of Asian or Pacific 

Islander American (Asian American), Black or African 

American (African American), Hispanic American, 

Native American or Alaskan Native American (Native 

American), or Multi-Racial American (Multi-Racial). 

Half of all MDIs at year-end 2013 were designated as 

serving Asian American communities (see Chart 1.4). 

Another 22 percent were designated as Hispanic 

American, with 5 Hispanic American MDIs located 

in Puerto Rico; 16 percent served African American 

communities; and 10 percent were serving the Native 

American community. Only two institutions were 

designated as Multi-Racial MDIs.

institutions, with assets totaling $181 billion, were 

designated by the FDIC as MDIs, equaling 2.6 percent 

of the 6,812 insured institutions. The number of insured 

institutions certified as CDFIs is even smaller, totaling 

just 78, or 1.1 percent of all insured institutions, at yearend 2013. Of these 78 CDFI banks, 41 were also designated as MDIs. While the number of insured 

institutions that are certified as CDFIs is relatively 

small, there were more than 700 CDFIs that were not 

insured institutions.

Geography and Demographics of MDIs

For reasons of data availability, the remainder of this 

study focuses primarily on the 174 FDIC-insured institutions designated as MDIs. By limiting the study in 

this fashion, we are able to identify MDI charters going 

Most MDIs Are Organized to Serve the Financial Needs of a Specic Minority Group

MDI Charters and Assets by Minority Status, 2013

28

34

5

87

18

2 African American

Hispanic American -

Not Puerto Rican

Hispanic American -

Puerto Rican

Asian American

Native American

Multi-Racial

Source: FDIC.

$6,734

$34,310

$59,456

$78,410

$2,099 $271

Charters Assets ($ millions)

Chart 1.4

MDIs Tend to Be Younger Than Other Institutions 

Age of Charter in Years, Year-End 2013

Source: FDIC.

0

20

40

60

80

100

120

MDIs Community Banks Noncommunity Banks

75th Percentile

Median

25th Percentile

Non-MDIs

Chart 1.3
FDIC Quarterly 39 2014, Volume 8, No. 3

Minority Depository Institutions

The asset portfolio of MDIs also resembles the community bank portfolio (see Table 1.2). Nearly half of MDI 

assets consist of loans secured by residential and 

commercial real estate, compared with 47 percent for 

community banks and 23 percent for noncommunity 

banks. Like community banks, MDIs also hold a disproportionate percentage of small loans to businesses and 

farms.9 MDIs held almost $15 billion in loans to small 

business in 2013, equaling 2.2 percent of the industry 

total, despite holding only a 1.2 percent share of industry assets.

Lending Specialty Group

MDI institutions not only have a higher share of total 

loans secured by real estate, but also exhibit higher 

concentrations in loans secured by commercial real 

estate (CRE) lending than community or noncommunity banks. This is especially apparent when identifying 

CRE specialists according to the lending specialty definitions used in the FDIC Community Banking Study. At 

year-end 2013, 58 percent of MDIs met the definition 

of a commercial real estate specialist, compared with 

22 percent of community banks (see Chart 1.5).10 By 

9

 Small commercial and industrial loans and small loans secured by 

nonfarm, nonresidential properties consist of loans with an original 

loan amount of less than $1 million, whereas small farmland loans and 

agricultural production loans have original loan amounts of less than 

$500,000.

10 Using the definitions in the FDIC Community Banking Study, CRE 

specialists are defined as institutions holding construction and development (C&D) loans greater than 10 percent of assets or total CRE 

loans (C&D, multifamily, and secured by other commercial properties) 

greater than 30 percent of total assets, while not meeting any other 

single-specialist definition.

The largest share of MDI assets are held by Hispanic 

American MDIs, which held 52 percent of MDI assets 

at year-end 2013. Among these institutions, five 

Hispanic American MDIs headquartered in Puerto 

Rico held $59.5 billion in assets—nearly a third of all 

MDI assets. An additional 43 percent of MDI assets 

were held by Asian American MDIs. And while 

African American MDIs make up 16 percent of MDI 

charters, they held less than 4 percent of MDI assets at 

year-end 2013.

Balance Sheet Characteristics

As most MDI-designated institutions also meet the 

definition of a community bank as described in the 

FDIC Community Banking Study, their balance sheet 

characteristics generally resemble those of other 

community banks. Like community banks, MDIs have 

a liability structure primarily built on core deposits.8

MDIs fund 71 percent of their portfolios through core 

deposits, a ratio that is slightly lower than the community bank core deposit ratio of 80 percent, but higher 

than the noncommunity bank ratio of 58 percent (see 

Table 1.1).

8

 Core deposits are defined as domestic deposits less brokered 

deposits. Historically, core deposits have been defined for analytical 

and examination purposes as the sum of demand deposits, all NOW 

and automatic transfer service accounts, money market deposit 

accounts, other savings deposits, and time deposits under $100,000. 

On March 31, 2011, this definition was revised to reflect the permanent increase in FDIC deposit insurance coverage from $100,000 to 

$250,000 and to exclude insured brokered deposits from core deposits. The definition used in the study provides consistency over time, 

since core deposits as defined before March 31, 2011, included some 

brokered deposits.

The MDI Liability Structure Is Mostly Built Around Core Deposits

December 31, 2013 MDIs Non-MDIs

Liability

Community Banks Noncommunity Banks

Dollars in 

Billions

Percent of 

Assets

Dollars in 

Billions

Percent of 

Assets

Dollars in 

Billions

Percent of 

Assets

Core Deposits $130 71% $1,583 80% $7,319 58%

Other Deposits $13 7% $52 3% $2,095 17%

Short-Term Borrowingsa $6 3% $38 2% $683 5%

Long-Term Borrowingsb $3 2% $48 2% $279 2%

Other Liabilities $8 4% $44 2% $768 6%

Equity Capital $22 12% $212 11% $1,410 11%

Total Liabilities and Equity Capital $181 100% $1,977 100% $12,553 100%

Source: FDIC. Amounts and percentages may not total due to rounding.

a

 Includes borrowings with a remaining maturity or time to next repricing of one year or less.

b

 Includes borrowings with a remaining maturity or time to next repricing of more than one year.

Table 1.1
FDIC QUARTERLY 40 2014, VOLUME 8, NO. 3

in CRE lending. The bulk of this shift came from MDIs 

that previously had a more diversified portfolio and met 

none of the lending specialty criteria. In 2002, 31 

percent of MDIs had no lending specialty. By 2013, this 

number had fallen to 21 percent.

Among minority status groups, Asian American MDIs 

had the highest concentration of CRE specialists in 2013 

at 74 percent. However, more than half of all African 

American MDIs were also CRE specialists in 2013.

Although a relatively large share of MDIs have a CRE 

specialization, it is worth noting that not all CRE loans 

bear the same risk. The risk profile of CRE loans may 

vary widely based on the property and occupancy type 

of the collateral. For example, CRE loans may consist 

of loans that finance construction and development 

pro jects, are secured by multifamily properties, or are 

secured by so-called nonfarm nonresidential properties. 

Chart 1.6 shows that of the total CRE loans held by 

MDIs in 2013, more than three-fourths were loans 

secured by nonfarm, nonresidential properties. And 

nearly 30 percent of all CRE loans were secured by 

owner-occupied commercial properties. In many cases, 

these loans closely resemble C&I loans, where real 

estate collateral has been attached in an abundance of 

contrast, fewer than 10 percent of MDIs were categorized as mortgage, commercial and industrial (C&I), or 

multi-specialty, while 21 percent of MDIs were categorized as diversified nonspecialists.

Over the past decade, MDIs have migrated to the CRE 

specialty group from other lending groups. A number of 

MDIs changed their lending strategy during this period 

from a focus on mortgage or C&I lending to specialize 

MDI Asset Portfolios Resemble Those of Community Banks

December 31, 2013 MDIs Non-MDIs

Loan or Asset Category

Community Banks Noncommunity Banks

Dollars in 

Billions

Percent of 

Assets

Dollars in 

Billions

Percent of 

Assets

Dollars in 

Billions

Percent of 

Assets

Mortgage Loansa $31 17% $392 20% $1,916 15%

Consumer Loans $9 5% $53 3% $1,291 10%

Commercial Real Estate (CRE) Loansb $59 32% $526 27% $998 8%

Construction and Development 

(C&D) Loans $5 3% $76 4% $129 1%

Commercial and Industrial (C&I) Loans $20 11% $177 9% $1,402 11%

Agricultural Loansc $1 0% $98 5% $50 0%

Other Loans and Leases $6 3% $10 0% $753 6%

Less: Loan Loss Provisions and 

Unearned Income $1 1% $3 0% $30 0%

Net Loans and Leases $124 68% $1,253 63% $6,381 51%

Securities $28 16% $455 23% $2,518 20%

Other Assets $29 16% $268 14% $3,666 29%

Total Assets $181 100% $1,977 100% $12,565 100%

Source: FDIC. Amounts and percentages may not total due to rounding.

a

 Mortgage loans include home equity lines of credit, junior liens, and other loans secured by residential real estate.

b

 CRE loans include construction and development (C&D) loans, loans secured by multifamily properties, and loans secured by nonfarm nonresidential real estate.

c

 Agricultural loans include production loans and loans secured by farm real estate.

Table 1.2

Minority Depository Institutions

Are Mostly Comprised of CRE Specialists

Source: FDIC. Loan categories with fewer than 5 percent of institutions are not labeled.

Percent of Institutions by Specialty Lending Group, Year-End 2013

32%

21%

16%

5%

22%

58%

16% 6%

Non-MDI Community Bank MDIs

Mortgage

Consumer

CRE

C&I

Agriculture

Multi-Specialty

No Specialty

Single Specialists 

Diversified

12%

9%

Chart 1.5
FDIC Quarterly 41 2014, Volume 8, No. 3

Minority Depository Institutions

as well as a certification process for community development financial institutions. Institutions that meet 

these definitions may benefit from programs created to 

support their provision of financial services to underserved consumers and communities.

Compared with the more than 6,800 insured financial 

institutions, the number of minority depository institutions and insured institutions that are certified as 

community development financial institutions is quite 

small. MDIs serve a number of minority groups, with 

half of MDIs bearing an Asian American minority 

status, followed by a large share of MDIs with a 

Hispanic American minority status. Finally, the balance 

sheet characteristics of MDIs generally resemble those 

of community banks. The following section considers 

the geography of MDIs and CDFI banks. 

Section 2. The Geography of MDIs and 

FDIC-Insured CDFIs

As the report will demonstrate when discussing social 

performance of minority depository institutions, MDIs 

are naturally linked to geographic areas that reflect the 

communities they seek to serve. The 174 MDI headquarters locations are mostly found in a relatively small 

number of metropolitan areas. However, these same 

institutions maintain nearly 1,800 offices that are somewhat more widely distributed. This section describes the 

geographic characteristics of MDI headquarters and 

office locations, examines their market share, and 

briefly describes the geographic characteristics of FDICinsured CDFI institutions.

Map 2.1 highlights a number of regional concentrations 

of MDI headquarters locations according to their 

caution. As documented in the FDIC Community Banking Study, this type of lending has increased throughout 

the industry over the past several decades.11 In addition, 

in terms of credit losses, these owner-occupied CRE 

loans performed somewhat better, on average, than 

unsecured C&I loans in the recent crisis.

The FDIC Community Banking Study also indicated that 

construction and development loans have generally 

performed worse than other CRE loan types during real 

estate downturns, and concentrations in construction 

and development (C&D) lending were associated with 

higher rates of failure during these periods of adversity. 

Although MDIs held $4.6 billion in C&D loans as of 

year-end 2013, few MDIs have concentrations in this 

type of lending. Only four of the MDIs that met the 

CRE lending specialist criteria in 2013 had a 10 percent 

concentration in C&D loans, comprising 4 percent of 

all MDIs that met the CRE criteria (see Chart 1.7). 

This is a much smaller percentage than the 16 percent 

of community bank CRE lenders that had a C&D 

concentration at year-end 2013.

Section Summary

Over time, a series of legislative, regulatory, and executive actions have been taken to further the goal of 

ensuring access to financial services by underserved 

populations and to encourage investment in and 

support of low- and moderate-income households and 

communities. Congress has enacted laws to provide a 

designation process for minority depository institutions 

11 For an extended discussion of the comparative risks of various types 

of CRE lending, see Chapter 5 of the FDIC Community Banking Study, 

2012, http://www.fdic.gov/regulations/resources/cbi/report/CBSI-5.pdf.

CRE Loans Held by MDIs Are Mostly Secured

by Nonfarm, Nonresidential Properties

$29.8

$17.2

$6.9

$4.6

Secured by Nonfarm Nonresidential

(Non-Owner Occupied)

Secured by Nonfarm Nonresidential

(Owner Occupied)

Secured by Multifamily Properties

Construction and Development

Total MDI CRE Loans: $58.6 Billion

Commercial Real Estate Loans Held by All MDIs

Year-End 2013, Dollars in Billions

Source: FDIC.

Chart 1.6

While 58 Percent of MDIs Qualify as CRE Specialists,

Only a Few Hold C&D Loans Greater Than

10 Percent of Total Assets 

MDI Commercial Real Estate Specialists, Year-End 2013,

According to Which CRE Criteria They Meet

Source: FDIC.

1

97

3

C&D Loans > 10% of Assets, or

Total CRE Loans > 30% of Assets,

or

Both

By Denition, CRE Specialists Hold

Either:

Chart 1.7
FDIC Quarterly 42 2014, Volume 8, No. 3

offices with 393, or more than one-fifth of all U.S. 

MDI offices. Texas has the second-largest number of 

MDI charters with 22 MDI institutions operating 306 

banking offices. Puerto Rico only has five MDIs, but it 

is also home to a total of 389 MDI banking offices, 

representing 22 percent of all U.S. MDI offices at yearend 2013.

Map 2.1 also shows that MDI headquarters tend to be 

concentrated in metropolitan areas. In all, some 87 

percent of MDI headquarters offices are located in one of 

the nation’s 388 metropolitan areas.12 In fact, 60 percent 

12 The Office of Management and Budget delineates metropolitan, 

micropolitan, and combined statistical areas. A revised delineation was 

issued on February 28, 2013, http://www.whitehouse.gov/sites/default/

files/omb/bulletins/2013/b13-01.pdf. Metropolitan Statistical Areas have 

at least one urbanized area of 50,000 or more population, plus adjacent 

territory that has a high degree of social and economic integration with 

the core as measured by commuting ties. Micropolitan Statistical Areas 

have at least one urban cluster of at least 10,000 but less than 50,000 

population, plus adjacent territory that has a high degree of social and 

economic integration with the core as measured by commuting ties.

minority status. By way of explanation, the headquarters of MDIs in large metropolitan areas are depicted as 

pie charts, with the size of the pie increasing with the 

number of MDIs headquartered in each city and the 

slices of the pie indicating the breakdown of those institutions by minority status. In the case of metropolitan 

and nonmetropolitan areas with few MDIs, each headquarters location is shown as a smaller circle. This 

depiction of MDI headquarters shows a cluster of 

Hispanic American MDIs in Texas, Florida, and Puerto 

Rico. African American MDIs tend to be concentrated 

in the eastern half of the United States, while Native 

American MDIs are concentrated in Oklahoma and the 

northern plains.

Overall, more than half of all MDIs reporting at yearend 2013 were headquartered in the four most populous 

U.S. states: California, Texas, New York, and Florida. 

California has by far the largest number of MDIs, with 

the 46 MDIs headquartered there representing more 

than one-quarter of all MDI charters (see Table 2.1). 

California is also home to the largest number of MDI 

Source: FDIC Summary of Deposits as of June 30, 2013.

MDIs Tend to Congregate in Metropolitan Areas

Locations of MDI Headquarters by Minority Status

Minority Status (# of Institutions)

 Asian American (87)

 Hispanic American (39)

 African American (28)

 Native American (18)

 Multi-Racial (2)

6 Institutions

6 Institutions

9 Institutions

11 Institutions

16 Institutions

10 Institutions

38 Institutions

Map 2.1
FDIC Quarterly 43 2014, Volume 8, No. 3

Minority Depository Institutions

Miami, and 10 are headquartered in Chicago. The 

remaining 13 percent of MDI headquarters offices, 

shown as medium-sized dots on the map, are located in 

17 nonmetropolitan areas. Nearly half (48 percent) of 

these nonmetro institutions are Native American MDIs.

of all MDI headquarters are located in just 9 cities, and 

another 46 MDIs are headquartered in 31 other metropolitan areas (see Table 2.2). Among the largest cities, 

38 MDIs are headquartered in greater Los Angeles, 16 

are headquartered in New York, 11 are headquartered in 

Top Ten MDI Headquarters Locations by State

State Number of Charters Percent of Charters Number of Offices Percent of Offices

California 46 26% 393 22%

Texas 22 13% 306 17%

New York 13 7% 117 7%

Florida 12 7% 115 6%

Oklahoma 11 6% 86 5%

Georgia 10 6% 41 2%

Illinois 10 6% 70 4%

Puerto Rico 5 3% 389 22%

Hawaii 4 2% 32 2%

*New Jersey 3 2% 30 2%

*Guam 3 2% 20 1%

*Alabama 3 2% 10 1%

*Pennsylvania 3 2% 7 0%

*Wisconsin 3 2% 5 0%

Other States 26 15% 172 10%

Total 174 100% 1,793 100%

Source: FDIC.

Note: Headquarters are as of December 31, 2013. Offices are as of June 30, 2013, as reported in the 2013 Summary of Deposits.

Offices include those physically located in each state, as opposed to the number of MDI offices operated by the MDIs headquartered in each state.

*Shaded states tied for the tenth-largest number of charters located in the state.

Table 2.1

Top Ten MDI Headquarters Locations by Metro Area

Metro Area Number of Charters Percent of Charters Number of Offices Percent of Offices

Los Angeles-Long Beach-Anaheim, CA 38 22% 280 16%

New York-Newark-Jersey City, NY-NJ-PA 16 9% 147 8%

Miami-Fort Lauderdale-West Palm Beach, FL 11 6% 103 6%

Chicago-Naperville-Elgin, IL-IN-WI 10 6% 70 4%

Atlanta-Sandy Springs-Roswell, GA 9 5% 35 2%

Houston-The Woodlands-Sugar Land, TX 6 3% 62 3%

San Francisco-Oakland-Hayward, CA 6 3% 56 3%

San Juan-Carolina-Caguas, PR 5 3% 268 15%

Urban Honolulu, HI 4 2% 24 1%

*McAllen-Edinburg-Mission, TX 3 2% 51 3%

*Dallas-Fort Worth-Arlington, TX 3 2% 30 2%

*Oklahoma City, OK 3 2% 30 2%

*Laredo, TX 3 2% 25 1%

*Philadelphia-Camden-Wilmington, 

PA-NJ-DE-MD 3 2% 7 0%

Other Metros (26) 31 18% 430 24%

Nonmetro Areas (17) 23 13% 175 10%

Total 174 100% 1,793 100%

Source: FDIC.

Note: Headquarters are as of December 31, 2013. Offices are as of June 30, 2013, as reported in the 2013 Summary of Deposits.

*Shaded cities tied for the tenth-largest number of charters located in a metropolitan area.

Table 2.2
FDIC Quarterly 44 2014, Volume 8, No. 3

operated by these institutions. With the exception of 

Hispanic American MDIs, most MDIs have relatively 

few offices. On average, MDIs serving Asian American, 

African American, Native American, and multi-racial 

communities operated fewer than eight offices each 

(see Chart 2.2). In stark contrast, MDIs that focus on 

the Hispanic American community tend to operate 

somewhat larger branch networks. Hispanic American 

MDIs operated 896 offices in Florida, Oklahoma, 

Puerto Rico, and Texas, for an average of 24 offices 

per institution. However, this average is heavily influenced by the 389 MDI banking offices in Puerto Rico. 

Even when excluding the Puerto Rico MDI offices, 

Hispanic American MDIs still operate an average of 15 

offices per institution, more than twice as many as any 

other group.

Market Share

Because so many of their headquarters and branch 

offices are located in metropolitan areas, MDIs tend to 

hold a relatively low share of their local banking 

MDI branch offices are similarly distributed across metro 

and nonmetro areas, with similar geographic concentrations based on minority status (see Map 2.2). Among 

the 1,793 offices maintained by MDIs as of June 30, 

2013, 58 percent were located among the top 9 metro 

areas shown in Table 2.2, an additional 24 percent were 

located in 26 other metro areas, and 175 branch offices, 

or 10 percent, were located in 17 nonmetro areas.

The fact that MDI headquarters and office locations are 

distributed in a similar fashion across the country is 

attributable in part to the relatively small geographic 

footprint of most MDIs. Similar to community banks, 

MDIs establish branch offices in areas they are familiar 

with near their headquarters location. Three-fourths of 

MDIs have offices located in three or fewer counties, 

compared with 83 percent of community bank offices 

(see Chart 2.1).

The close proximity of MDI branch offices may also 

be related to the relatively small number of offices 

Source: FDIC Summary of Deposits as of June 30, 2013.

MDI Ofces Tend to Cluster Geographically According to Minority Status

MDI Office Locations by Minority Status

Minority Status (# of Ofce Locations)

 African American (152)

 Hispanic American (916)

 Asian American (657)

 Native American (63)

 Multi-Racial (5)

Map 2.2
FDIC Quarterly 45 2014, Volume 8, No. 3

Minority Depository Institutions

than 250,000 where MDIs held a deposit-market share 

of at least 25 percent (see Table 2.3).14 MDIs hold a 

sizable market share even in some of the largest U.S. 

metropolitan counties. For instance, they hold more 

than 10 percent of metro-area deposits in Los Angeles 

County and nearly 9 percent of metro-area deposits in 

Miami-Dade County, with combined populations of 

more than 12 million and MDI deposits of more than 

$39 billion.

With so many MDIs located in metropolitan areas, 

micropolitan and rural counties are home to relatively 

14 These market shares exclude counties in U.S. territories, such as 

Puerto Rico, where MDIs control more than 90 percent of local deposits in 56 counties.

market deposits. One way to measure market share is by 

use of the reported deposits held by individual banking 

offices as found in the FDIC Summary of Deposits 

(SOD).13 MDIs held just 1.5 percent of the metro office 

deposits of all FDIC-insured institutions in 2013. 

However, there were four U.S. metropolitan counties 

that were part of metro areas with populations greater 

13 Data on total banking offices are collected through the Summary of 

Deposits (SOD), which provides a detailed record of each individual 

banking office, its location, and total deposits, starting in 1987. The 

SOD covers all FDIC-insured institutions including insured U.S. 

branches of foreign banks. Banking offices are defined to include all 

offices and facilities that actually hold deposits, and do not include 

loan production offices, computer centers, and other nondeposit 

installations, such as automated teller machines (ATMs).

MDIs Generally Have a Small Geographic Footprint,

Similar to Community Banks

Percent of Institutions According to Number of

Counties With Offices

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

MDIs Community Banks

(Excluding MDIs)

 Noncommunity Banks

(Excluding MDIs)

All Offices in One County

All Offices in Two or 

Three Counties

Source: FDIC Summary of Deposits as of June 30, 2013.

75%

32%

43%

36%

13%

47%

33%

83%

46%

Chart 2.1

Hispanic MDIs Tend to Have the Largest

Branch Networks

Average Number of Offices by MDI Minority Status

23.5

0

5

10

15

20

25

Asian

American

African

American

Hispanic

American

Multi-Racial Native

American

Including Puerto Rico

Excluding Puerto Rico

Source: FDIC Summary of Deposits as of June 30, 2013.

7.6 5.4

14.6

2.5 3.5

Chart 2.2

Top Ten Large Metro Counties by MDI Deposit Market Share

County Metro State

MDI Deposits 

($000)

MDI Market Share 

(Percent)

Logan Oklahoma City OK $157,368 48.3%

Webb Laredo TX 2,564,258 46.3%

Hidalgo McAllen TX 2,590,891 26.7%

Cameron Brownsville TX 1,024,956 24.9%

Valencia Albuquerque NM 99,696 18.6%

Los Angeles Los Angeles CA 30,890,448 10.2%

Miami-Dade Miami FL 8,328,806 8.8%

Canadian Oklahoma City OK 118,444 7.5%

Hoke Fayetteville NC 7,771 7.0%

DeKalb Atlanta GA 555,792 6.8%

Total Metro 131,792,042 1.5%

Source: FDIC calculations based on data from the Summary of Deposits and the 2010 Census. 

Note: Includes counties of the 50 states and DC with more than 40,000 people in metropolitan areas with total population greater than 250,000. Total Metro includes all counties in metropolitan 

areas.

Table 2.3
FDIC Quarterly 46 2014, Volume 8, No. 3

FDIC-Insured CDFI Locations Differ From 

Non-CDFI MDI Markets

In 2013, there were 37 FDIC-insured institutions certified as CDFIs that were not also designated as minority 

depository institutions. These non-MDI CDFI banks 

have a geographic footprint that differs from most 

MDIs. Whereas most MDIs are highly concentrated in 

the four most populous states, the 37 FDIC-insured 

CDFIs that are not MDIs are concentrated in Mississippi, Illinois, and California (see Table 2.5). Together, 

few MDIs, and they hold less than 1 percent of local 

deposits in these markets. However, there are selected 

nonmetro areas in which MDIs hold a much larger 

deposit market share. Excluding U.S. territories, MDIs 

held more than a 9 percent deposit market share in 27 

micropolitan and rural counties in 2013. Many of these 

counties, such as those in Oklahoma, New Mexico, and 

Montana, are served by Native American institutions. 

The top ten nonmetro counties by MDI deposit market 

share are shown in Table 2.4.

Top Ten Nonmetro Counties by MDI Deposit Market Share

County Area State

MDI Deposits 

($000)

MDI Market Share 

(Percent)

Zapata Micropolitan TX $292,612 100.0%

Starr Micropolitan TX 344,353 72.7%

Maverick Micropolitan TX 450,900 71.7%

Adair Rural OK 114,730 65.0%

Taos Micropolitan NM 162,091 38.7%

Calhoun Micropolitan TX 147,508 33.5%

Macon Rural AL 25,788 27.8%

Jim Hogg Rural TX 41,269 25.9%

Cherokee Micropolitan OK 98,500 25.8%

Robeson Micropolitan NC 253,394 25.2%

Total Nonmetro 6,740,152 0.9%

Source: FDIC calculations based on data from the Summary of Deposits and the 2010 Census.

Note: The list of top ten nonmetro counties excludes counties in U.S. territories. The total MDI market share for nonmetro counties includes counties in U.S. territories.

Table 2.4

Top Ten Headquarters Locations by State

MDI Excluding CDFI MDIs MDIs That Are Also CDFIs Insured CDFIs That Are Not MDIs

State

Number of 

Charters

Percent of 

Charters State

Number of 

Charters

Percent of 

Charters State

Number of 

Charters

Percent of 

Charters

CA 39 29 CA 7 17 MS 12 32

TX 22 17 IL 7 17 CA 4 11

FL 12 9 OK 3 7 IL 4 11

NY 11 8 GA 3 7 GA 2 5

OK 8 6 NY 2 5 AL 2 5

GA 7 5 AL 2 5 OK 1 3

PR 5 4 PA 2 5 NY 1 3

HI 4 3 TN 2 5 WI 1 3

GU 3 2 NJ 1 2 DC 1 3

IL 3 2 WI 1 2 KY 1 3

15 Other 

States 19 14

11 Other 

States 11 27

8 Other 

States 8 22

Total 133 100 Total 41 100 Total 37 100

Source: FDIC.

Note: Charters are as of December 31, 2013.

Table 2.5
FDIC Quarterly 47 2014, Volume 8, No. 3

Minority Depository Institutions

Non-MDI CDFI banks also differ from MDIs in terms of 

the share located in nonmetropolitan areas. While 

almost 90 percent of MDIs are headquartered in metro 

areas, only about half (51.4 percent) of non-MDI 

FDIC-insured CDFIs are headquartered in metro areas 

(see Table 2.7).

Section Summary

Minority depository institutions are naturally linked to 

geographic areas that reflect the communities they seek 

to serve. As a result, most MDIs are headquartered in a 

handful of the most populous states. In addition, a large 

majority of the headquarters and branch offices of these 

institutions are located in large metropolitan areas. Due 

these states represent more than half (54 percent) of all 

non-MDI FDIC-insured CDFI charters.

Not only are non-MDI FDIC-insured CDFIs concentrated in a few states, but more than half of their banking offices are located in Mississippi. This is in part due 

to the larger size and branching network of Mississippi 

banks that are certified as CDFIs, as well as the higher 

percentage of low-income households in Mississippi. 

(Among all states, Mississippi has the highest percentage population living below the poverty level.) The 12 

FDIC-insured CDFIs headquartered in Mississippi have 

on average 15 offices each (see Table 2.6).

Top Ten Office Locations by State

MDI Excluding CDFI MDIs MDIs That Are Also CDFIs Insured CDFIs That Are Not MDIs

State

Number of 

Offices

Percent of 

Offices State

Number of 

Offices

Percent of 

Offices State

Number of 

Offices

Percent of 

Offices

PR 389 24 IL 41 20 MS 185 56

CA 364 23 CA 29 14 AL 27 8

TX 306 19 NY 25 12 AR 23 7

FL 114 7 GA 18 9 IL 12 4

NY 92 6 LA 12 6 LA 12 4

OK 81 5 MD 9 4 SC 12 4

HI 32 2 AL 8 4 GA 10 3

IL 29 2 NC 8 4 CA 9 3

NJ 24 2 DC 6 3 MN 8 2

GA 23 1 NJ 6 3 OR 6 2

25 Other 

States 136 9

16 Other 

States 41 20

11 Other 

States 27 8

Total 1,590 100 Total 203 100 Total 331 100

Average 

Number of 

Offices Per 

Charter:

12.0

Average Number of 

Offices Per Charter: 5.0 Average Number of Offices Per Charter: 8.9 Excl. PR 9.4

Source: FDIC.

Note: Charters are as of December 31, 2013.

Table 2.6

Location of Charter by Metro and Nonmetro Area

MDI Excluding CDFI MDIs MDIs That Are Also CDFIs Insured CDFIs That Are Not MDIs

Area

Number of 

Charters

Percent of 

Charters

Number of 

Charters

Percent of 

Charters

Number of 

Charters

Percent of 

Charters

Metro 115 86.5 36 87.8 19 51.4

Nonmetro 18 13.5 5 12.2 18 48.6

Total 133 100 41 100 37 100

Source: FDIC.

Note: Charters are as of December 31, 2013.

Table 2.7
FDIC Quarterly 48 2014, Volume 8, No. 3

than community banks as a whole during this period, 

but the sources of this change have been somewhat 

unique to the MDI sector. This section further details 

the nature of structural change in the MDI sector 

between 2001 and 2013.

Number of Charters

During the study period, MDIs increased in absolute 

number, from 164 charters in 2001 to 174 in 2013. As 

previously noted, MDI assets have more than doubled 

over this period, from $83 billion to $181 billion. 

However, as reflected in Chart 3.1, the size of the MDI 

sector peaked near the beginning of the recent financial 

crisis, and has trended downward since that time in 

both absolute and relative terms.

The decline in the size of the MDI sector is related to 

a number of factors, the most important of which has 

been bank failures. Over the entire study period, MDIs 

were about three times as likely to fail as all other 

banks. Between year-end 2001 and 2013, 33 MDIs 

failed (see Chart 3.2, lower right). The number of 

MDI charters has also declined as a result of voluntary 

mergers. During the study period, 29 MDIs were 

acquired by non-MDI financial institutions, and an 

additional 28 MDIs were acquired by other MDIs 

(lower left). There has also been a sharp slowdown in 

the chartering of new MDIs, with only 6 being created 

since 2007, whereas 33 new MDIs were chartered 

between 2005 and 2007 (upper left).

Over the past 13 years, a large number of preexisting 

institutions were designated as MDIs, while fewer institutions lost MDI status (Chart 3.2, upper right). This 

to the concentration of MDI headquarters and branch 

offices in large metro areas, MDIs generally hold a relatively small share of their local market. Nonetheless, 

there are a few large counties, including Los Angeles 

and Miami-Dade, where MDIs hold a rather significant 

share of total bank deposits. Minority depository institutions also hold a sizable share of deposits in some 

micropolitan and rural counties, although their overall 

presence in nonmetro areas is small. The concentration 

of MDI offices in a limited number of metropolitan 

areas is to some extent attributable to the relatively 

small geographic footprint of MDIs, with most MDI 

offices being located in an area of three counties or less. 

With the exception of Hispanic American MDIs, most 

MDIs operate a relatively small number of banking 

offices.

Unlike MDIs, insured institutions that are certified as 

CDFIs, but are not also MDIs, tend to be concentrated 

in Mississippi, Illinois, and California, with more than 

half of their banking offices located in Mississippi. 

Finally, unlike MDIs, only about half of these FDICinsured CDFIs are located in metropolitan areas.

Section 3. Structural Change Among Minority 

Depository Institutions

The financial services industry has experienced significant change over the past three decades as a result of 

failures, mergers between banking organizations, the 

consolidation of charters within existing organizations, 

and newly chartered institutions. During the 13-year 

study period covered by the report, the MDI sector has 

also experienced a great deal of structural change. Not 

only has it experienced even greater structural change 

After Pre-Crisis Growth, the MDI Share of the Banking Industry Has Declined

174

0

50

100

150

200

250

2001 2004 2007 2010 2013

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

Charters Percent of Industry

2.6%

MDI Charters

$181

0

50

100

150

200

250

2001 2004 2007 2010 2013

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

1.8%

Dollars in Billions Percent of Industry

MDI Assets

1.2% 1,793

0

500

1000

1500

2000

2500

2001 2004 2007 2010 2013

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

Offices Percent of Industry

MDI Banking Ofces

1.9%

Source: FDIC.

Charters

Percent of Industry

Dollars in Billions

Percent of Industry

Offices

Percent of Industry

Chart 3.1
FDIC Quarterly 49 2014, Volume 8, No. 3

Minority Depository Institutions

was the most important source of growth for the MDI 

sector over much of the study period.

Chart 3.3 depicts the net effect of new charters, mergers, failures, and redesignations over the study period. 

A total of 81 institutions were redesignated as MDIs 

during the study period, compared with 20 institutions 

that lost MDI status, making redesignation the most 

important factor behind the net increase in the number 

of MDIs over the study period.

Impact of Structural Change on the Assets 

Controlled by MDIs

As minority depository institutions have failed or 

merged, concerns have been expressed that these institutions are being acquired by entities that may not be 

focused on addressing the financial needs of minority 

Sources of Structural Change Among FDIC-Insured Minority Depository Institutions (MDIs), 2001–2013

44 New MDIs Were Chartered 81 Existing Institutions Gained MDI Status

Annual Number of New MDI Charters 20 MDI Institutions Lost MDI Status

Annual Number of Institutions Redesignated

57 MDIs Were Acquired in Voluntary Mergers 33 MDIs Failed

Annual Number of MDI Mergers Annual Number of MDI Failures

Source: FDIC.

1

2 2

7

12

14

4

2

0000 0

2

4

6

8

10

12

14

16

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

-2 -1 -2 -1

-3 -2 -2 -3 -2 -2

5 7 9

17

5 6 8

3

8 6

1

6

-5

0

5

10

15

20

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

To MDI

From MDI

3

5

3 2 1 2 2

4

1

5

4

4

8

1

2 5

3

1

1

0

2

4

6

8

10

12

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Acquired by Non-MDIs

Acquired by MDIs 28

29

1 2

4 3 2 1 1

1

5

7

3

1

1

1

0

2

4

6

8

10

12

14

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Depositor Payoff 2

Acquired by Non-MDI 18

Acquired by MDI 13

Chart 3.2

The Increase in the Number of Minority Depository

Institution Charters Since 2001 Has Been Driven

Mostly by Redesignations

Number of MDI Charters

164

+44

Failures

-33

Mergers

-57

Other

-5

To MDI

+81

From MDI

-20

174

Source: FDIC.

+ New

Charters

- Closings

+/-

Redesignations

MDIs

in 2001

MDIs

in 2013

Changes Between 2001 and 2013

-150

-100

-50

0

50

100

150

200

Chart 3.3
FDIC Quarterly 50 2014, Volume 8, No. 3

communities. Indeed, one of the stated goals of 

Section 308 of the Financial Institutions Reform, 

Recovery, and Enforcement Act is to “preserve the 

minority character in cases of merger or acquisition.” 

But despite acquisition of 88 MDIs during the study 

period, most of the assets of these institutions have 

been acquired by other MDIs (see Chart 3.4). Of the 

57 MDIs acquired through voluntary mergers during 

the study period, slightly less than half (28 institutions) were acquired by other MDIs. In addition, of the 

33 MDIs that failed during the study period, 13 (39 

percent) were acquired by other MDIs. Although these 

percentages might appear low at first glance, it is 

important to point out that a much larger share of the 

total assets of closed MDIs remained under the control 

of other MDIs after acquisition. In all, nearly twothirds of the assets of the merged institutions and 87 

percent of the assets of the failed institutions wound 

up staying with MDI acquirers.

While every segment of the banking industry has 

undergone structural change in recent years, the MDI 

population has been relatively volatile compared with 

other types of institutions. For example, MDIs were 

about half as likely as community banks as a whole to 

operate continuously (that is, in the absence of structural change or group redesignation) throughout the 

study period (see Chart 3.5). Only 30 percent of MDIs 

operated continuously throughout the study period, 

compared with 57 percent of community banks. This 

volatility in the MDI population tends to complicate 

time series analysis, as changes in the population 

sometimes matter as much or more than changes 

in performance.

Changes in Minority Status Designation

As the MDI sector has changed over time, so has its 

composition in terms of minority status. The most 

prominent change to this composition has been the 

increase in the share of MDIs that have an Asian 

American minority status. Since 2001, the number of 

MDIs with this minority status increased by about a 

third. By 2013, Asian American institutions represented half of all MDIs (see Chart 3.6). The number of 

Hispanic American MDIs grew from 23 institutions in 

2001 to 34 in 2013, representing 19.5 percent of MDI 

charters. Meanwhile, the number of African American 

MDIs declined by more than one-third during this 

period and they represented fewer than one-fifth of all 

MDIs at year-end 2013, compared with nearly a third 

of all MDIs in 2001.

Most of the Assets of Merged and Failed MDIs

Have Been Acquired by Other MDIs

Acquired by

Non-MDIs

(29 Mergers;

Acquired by $6.7 Billion)

Other MDIs

(28 Mergers;

$12.8 Billion)

Source: FDIC. The failed bank acquisition amount excludes the two depositor payouts.

Percent of Assets Acquired, 2002–2013

In Voluntary Mergers In Failed Bank Acquisitions

Acquired by

Other MDIs

(13 Failures;

$21.8 Billion)

Acquired

by Non-MDIs

(18 Failures;

$3.3 Billion)

Chart 3.4

The MDI Population Has Been Somewhat More Volatile

Over Time Than the Community Bank Population

Unique Banks Reporting in at Least One Year-End as:

9,668 institutions reported as

community banks in at least one

year-end over the study period.

289 institutions reported as

MDIs in at least one year-end

over the study period.

Source: FDIC.

MDIs Community Banks

Continuously

Reported

2001–2013

Underwent

Structural

Changes

Underwent

Definitional

Changes Only

18%

30%

52%

3%

57%

40%

Chart 3.5

The Number of MDI Charters Has Increased Over Time

Source: FDIC.

0

50

100

150

200

250

2001 2003 2005 2007 2009 2011 2013

Multi-Racial

Hispanic American –

Not Puerto Rican

Hispanic American –

Puerto Rican

African American

Native American

Asian American

Number of Charters

Chart 3.6
FDIC Quarterly 51 2014, Volume 8, No. 3

Minority Depository Institutions

This section finds that while the financial performance 

of MDIs also more closely resembles that of community 

banks than noncommunity banks, MDIs tend to underperform both groups in terms of standard measures of 

financial performance. Several factors that may contribute to this difference in performance are also explored, 

including the concentration of MDIs in metropolitan 

areas, many of which experienced extreme financial 

distress during the recession, as well as the relatively 

young age of MDIs.

Profitability

One of the most widely used measures of financial institution performance is pretax return on assets (pretax 

ROA).15 Chart 4.1 depicts annual pretax ROA for 

MDIs and non-MDI community and noncommunity 

institutions over the 2001–2013 period. The shaded 

region on the chart also depicts the 25th to 75th 

percentile of the pretax ROA distribution for MDIs in 

each year, with the bottom and top 25 percent of MDIs 

excluded.

Across the entire study period, MDIs reported a 

weighted average pretax ROA of 0.69 percent, compared 

with 1.02 percent for community banks and 1.34 percent 

for noncommunity banks. The average profitability of 

MDIs and community banks was very similar through 

roughly the first five to six years of this period, after 

which MDIs began to underperform both community 

and noncommunity banks. However, MDI profitability 

once again converged with that of community banks in 

15 Pretax return on assets equals pretax net income as a percent of 

average assets and includes extraordinary items and other adjustments, net of taxes.

As the composition of MDI minority status groups 

changed over the period, the share of MDI assets also 

shifted. In 2001, Asian American institutions held 23 

percent of MDI assets. By year-end 2013, their share of 

MDI assets had nearly doubled to 43 percent. The assets 

of Hispanic American MDIs also grew rapidly, rising 

more than two-thirds during the study period and leaving them with 52 percent of total MDI assets in 2013. 

Hispanic American MDIs in Puerto Rico made up over 

one-third of total MDI assets in 2013. Finally, African 

American, Native American, and Multi-Racial MDIs 

held 4 percent or less of MDI assets at year-end 2013.

Section Summary

Like other groups of depository institutions, the MDI 

banking segment experienced significant structural 

change during the 2001–2013 period of this study. The 

number of MDI charters has fluctuated as new MDIs 

were chartered, existing institutions were designated as 

MDIs, existing MDIs were acquired by other institutions, and some MDIs failed. In fact, compared with the 

industry overall, and especially community banks, the 

MDI population has experienced significant volatility, 

with relatively few MDIs operating continuously 

throughout the study period. The composition of the 

MDI segment has also changed over time, as the share 

of MDIs with an Asian American or Hispanic American minority status has increased and the share of African American MDIs has declined.

Section 4. Financial Performance of Minority 

Depository Institutions

As described in earlier sections, the MDI segment is 

relatively small, with only 174 out of 6,812 FDICinsured institutions being designated as MDIs at yearend 2013. In addition, this industry segment has 

changed significantly during the study period and has 

demonstrated greater volatility than other industry 

segments. These factors make long-term group comparisons of MDI performance difficult. Nonetheless, it is 

instructive to compare the relative performance of 

MDIs with other groups of institutions, both in terms of 

standard measures of financial performance (this 

section) and in terms of social impact (Section 5). This 

section describes the financial performance of MDIs 

between year-end 2001 and year-end 2013, compared 

with two groups: community and noncommunity banks 

that are not designated as MDIs (so-called non-MDI 

community banks and non-MDI noncommunity 

banks). Section 2 has already described how MDIs more 

closely resemble community banks than noncommunity 

banks in terms of size and balance sheet characteristics. 

Many MDIs Underperform in Terms of Standard

Industry Measures of Financial Performance

Annual Weighted Average Pretax Return on Assets (ROA)

(Percent)

-3

-2

-1

0

1

2

3

2001 2003 2005 2007 2009 2011 2013

MDI

Non-MDI Noncommunity Bank

Non-MDI Community Bank

Source: FDIC.

Depicts the 25th to 75th Percentiles of

Pretax ROA Distribution for MDIs in Each Year

Chart 4.1
FDIC Quarterly 52 2014, Volume 8, No. 3

than-average overhead expenses. Across the study 

period, MDIs under $100 million reported noninterest 

expenses that were more than twice as high (4.8 

percent) as those reported by MDIs over $1 billion 

(2.3 percent).

The influence of minority status and institution size 

may also help to explain variation in expense and efficiency ratios across MDI minority status groups. As 

shown in Chart 4.3, overhead expenses have been 

substantially higher among African American, Native 

American and Multi-Racial MDIs than among Asian 

American and Hispanic American MDIs. Although 

geography may be one factor that drives these 

disparities—for example, MDIs in Puerto Rico have 

much lower expense ratios than those in New York—

the most important factor seems to be average size. 

The African American, Native American, and MultiRacial MDIs average $100 to $250 million in size in 

2011 and 2012 as the economy recovered and asset quality stabilized.

Although MDIs were found to perform somewhat like 

community banks with regard to net interest income 

and noninterest income (see Chart 4.2, upper charts), 

MDIs experienced higher expenses related to problem 

loans, as well as higher overhead expenses. For example, across the study period, MDIs reported loan loss 

provisions averaging 0.93 percent of assets, more than 

twice as much as community banks and higher even 

than noncommunity banks (lower left). Meanwhile, 

MDIs reported overhead expenses that were lower, on 

average, than both community and noncommunity 

banks (lower right). However, the shaded region in 

the noninterest expense chart shows that almost 

three-quarters of MDIs reported above average 

expense ratios in any given year. The very smallest 

MDIs, in particular, were found to have much-higherMDIs Perform Much Like Community Banks in Certain Respects, but Many of Them Report Higher Expense Ratios

Net Interest Income 

Loan Loss Provision 

Annual Percent of Average Assets, Weighted Average

Source: FDIC.

0.0

1.0

2.0

3.0

4.0

5.0

2001 2003 2005 2007 2009 2011 2013

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2001 2003 2005 2007 2009 2011 2013

Annual Percent of Average Assets, Weighted Average

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2001 2003 2005 2007 2009 2011 2013

Noninterest Income 

Annual Percent of Average Assets, Weighted Average

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2001 2003 2005 2007 2009 2011 2013

Noninterest Expense

Annual Percent of Average Assets, Weighted Average

MDI

Non-MDI Noncommunity Bank

Non-MDI Community Bank

Depicts the 25th to 75th Percentiles 

for MDIs in Each Year 

Chart 4.2
FDIC Quarterly 53 2014, Volume 8, No. 3

Minority Depository Institutions

overhead expenses on the part of smaller institutions. 

Across the study period, MDIs with assets less than 

$100 million reported an average efficiency ratio (92 

percent) that was substantially higher than MDIs with 

assets over $10 billion (55 percent). While efficiency 

ratios are generally higher for smaller institutions in 

every group, the disparity in efficiency ratios by size is 

even more pronounced in the case of MDIs (see 

Chart 4.5).

Based on the similarities between MDI and community 

bank pretax return on assets during most periods, a 

question arises as to whether the performance differences are statistically significant. The inset box 

discusses two tests of statistical significance with 

respect to MDIs and community banks from our observational study completed in 2013.

2013—far smaller than the $900 million for Asian 

American MDIs and $1 billion for Hispanic American 

MDIs outside Puerto Rico. Puerto Rico MDIs averaged 

$11.9 billion in assets at year-end 2013.

Efficiency ratios also show differences in the ability of 

small and large banks to generate revenue in relation 

to the expenses they incur in doing so. The efficiency 

ratio is the ratio of noninterest expense to net operating revenue, where a higher efficiency ratio indicates 

an institution that is less efficient at generating revenue per dollar of noninterest expense.16 The FDIC 

Community Banking Study identified the emergence of 

a sizable “efficiency gap” between community and 

noncommunity banks during the period after 1998 

that has narrowed only slightly in the years following 

the onset of the recent financial crisis. In comparison, 

the average MDI efficiency ratio has tended to fall 

between the weighted average for community and 

noncommunity banks (see Chart 4.4). During the 

study period, the average efficiency ratio of noncommunity banks equaled 57.1 percent, compared with 

61.4 percent for MDIs, and 66.6 percent for community banks. Although the weighted average MDI efficiency ratios fell between these two figures during most 

years, the shaded region on the chart shows that threequarters or more of MDIs report efficiency ratios 

higher than the average MDI in any given year.

The large share of MDIs with relatively high efficiency 

ratios mostly appears to point to higher-than-average 

16 Formally, the efficiency ratio is expressed as: 

Efficiency Ratio = Noninterest Expense

Net Interest Income + Noninterest Income.

Overhead Expenses Vary Widely

Across Minority Status Groups

Annual Weighted Average Noninterest Expense as a Percent of Average Assets

0

1

2

3

4

5

6

7

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Asian American African American Hispanic American

Multi-Racial Native American

Source: FDIC.

Chart 4.3

Efciency Ratio

MDI

Non-MDI Noncommunity Bank

Non-MDI Community Bank

Source: FDIC.

Annual Weighted Average Efficiency Ratio

(Percent)

0

20

40

60

80

100

120

2001 2003 2005 2007 2009 2011 2013

Efficiency Ratio =

Noninterest Expense

Net Interest Income + Noninterest Income

Depicts the 25th to 75th Percentiles

of Efficiency Ratio Distribution 

for MDIs in Each Year 

Chart 4.4

The Smallest MDIs, in Particular, Stand Out in Terms

of Elevated Efciency Ratios

Weighted Average Efficiency Ratio for Group, 2001–2013

(Percent)

92

71

60

55

0

10

20

30

40

50

60

70

80

90

100

< $100 Million $100 Million – 

$1 Billion

$1 – $10 Billion > $10 Billion

MDIs

Non-MDI Community Banks

Non-MDI Noncommunity Banks

Source: FDIC. Asset Size Group

Chart 4.5
FDIC Quarterly 54 2014, Volume 8, No. 3

Some of the difference in MDI and non-MDI performance may be attributed to the influence of geographic 

concentrations. As noted earlier, 60 percent of MDI 

offices were located among the top nine metro areas, 

with many of these large metro areas experiencing severe 

distress during the economic crisis. Table 4.1 shows that 

both MDI and non-MDI community banks headquartered in metro areas had lower pretax ROA during the 

recession, compared with institutions in nonmetro areas.

Younger institutions also performed worse relative to 

more seasoned charters. Overall, MDIs have a higher 

Factors That Affect Performance

While MDI financial performance resembled that of 

community banks prior to the recent recession, their 

performance diverged during the crisis. Table 4.1 shows 

that the aggregate average pretax return on assets for 

non-MDI and MDI community banks was similar prior 

to the crisis, but MDI community banks experienced 

negative pretax ROA in the period from 2007 to 2009. 

These results do not necessarily rule out the possibility 

of other correlating factors. Future research may provide 

additional insight into these potential correlations, 

which could include geographic and age characteristics.

In a simple comparison of financial performance, the 

pretax ROA of MDIs in Chart 4.1 is generally lower 

than that of non-MDI community banks. Other measures 

of financial performance depicted in Charts 4.2 through 

4.4 also depict systematic differences between the two 

subject groups. Our analytical work related to the 2013 

Interagency MDI/CDFI Bank Conference included analysis of these differences for the period between 2001 and 

2012. But are these differences statistically significant?

To answer this question, we conducted an observational 

study in which financial institutions are treated as 

subjects and the MDI designation serves as a treatment 

factor. In this analysis, we employ two tests: a t-test and 

a Wilcoxon rank-sum test. Both tests have been applied 

to group comparisons of pretax ROA and other financial 

performance ratios on a pooled basis over the 2001–2012 

period (see Chart below). The t-tests and Wilcoxon 

rank-sum tests both consistently indicate that differences in financial performance between MDIs and nonMDI community banks are statistically significant. MDIs 

tend to have measurably lower pretax ROA than do 

non-MDI community banks, and also have higher 

noninterest expenses and loan loss provisions. Differences in MDI and non-MDI efficiency ratios were also 

found to be statistically significant. Overall, the results 

of our analysis indicate that statistically meaningful 

differences exist between the financial performance of 

MDIs and non-MDI community banks.

Additional information related to these tests and the 

methodology is available in the Appendix.

Are Differences in Financial Performance of MDI and 

Non-MDI Financial Institutions Statistically Significant?

Components of MDI and Non-MDI Community Bank ROA, 2001–2012

Pretax ROA

Net Interest

Income

Noninterest

Income to Assets

Noninterest

Expense to Assets

Loan Loss

Provisions to Assets

Source: FDIC. 

*Indicates statistical difference at 5 percent significance level.

Average Values/T-Test Median Values/Rank-Sum Test

0% 1% 2% 3% 4% 5%

0.30%*

0.93%

3.63%

0.73%

0.33%

3.13%

1.05%*

3.77%*

4.01%*

0.57%*

0% 1% 2% 3% 4% 5%

0.70%*

1.14%

3.62%

0.58%

0.17%

2.96%

0.71%*

3.78%*

3.62%*

0.28%*

MDIs

Non-MDI Community Banks
FDIC Quarterly 55 2014, Volume 8, No. 3

Minority Depository Institutions

Smaller MDIs especially were found to have much 

higher noninterest expenses compared with larger MDIs 

and community banks. In addition, smaller MDIs also 

were less efficient compared with both mid-size and 

larger MDIs, as well as non-MDI community and 

noncommunity banks. However, to the extent that 

MDIs have been chartered to serve a variety of stakeholders in addition to equity shareholders, it is important to also consider their relative performance in terms 

of social impact, which we do in Section 5.

Section 5. Social Impact of Minority 

Depository Institutions

MDIs play an important role in providing mortgage 

credit and other banking services to minority and 

low- and moderate-income (LMI) communities.17 As 

noted in Section 2, MDI headquarters are concentrated 

in metropolitan areas, while their 1,793 offices are 

somewhat more widely distributed. There is a natural 

17 Low-income census tracts have median family income of less than 

50 percent of the MSA’s median family income. Moderate-income 

census tracts have median family income of between 50 percent and 

less than 80 percent of the MSA’s median family income.

proportion of younger institutions than do non-MDIs. 

The 2012 FDIC Community Banking Study demonstrated that newer community banks on average underperformed more mature community banks. In nearly 

every time period studied, community banks with an 

age of less than five years performed worse than any 

other age cohort. This phenomenon is consistent 

among young MDI community banks as well. Younger 

MDIs had lower pretax ROA both leading up to as well 

as during the recession.

Section Summary

The wide variation in size among MDI institutions, in 

addition to significant structural change in this 

segment, tends to complicate long-term group comparisons of MDI performance with that of other groups of 

banks. Nonetheless, we find that MDIs generally underperform non-MDI community and noncommunity 

institutions in terms of standard industry measures of 

financial performance such as pretax return on assets. 

MDIs were found to perform much like community 

banks with regard to net interest income and noninterest income, but experienced higher expenses related to 

problem loans as well as higher overhead expenses. 

Table 4.1

MDI Performance Resembles Similarly Situated Community Banks

Aggregate Average Pretax Return on Assets, Percent

Overall 2001–2003 2004–2006 2007–2009 2010–2012 2013 2001–2013

Noncommunity Banks

Non-MDI 2.0 2.0 0.4 1.3 1.6 1.3

MDI 1.6 1.5 -0.1 0.6 0.9 0.8

Community Banks

Non-MDI 1.5 1.5 0.5 0.7 1.1 1.0

MDI 1.3 1.5 -0.5 0.1 0.8 0.5

By MSA

Community Banks

Non-MDI Metro 1.5 1.5 0.3 0.6 1.1 0.9

Nonmetro 1.5 1.5 0.9 0.9 1.2 1.2

MDI Metro 1.3 1.6 -0.6 0.1 0.8 0.5

Nonmetro 1.3 1.4 0.6 0.8 0.8 0.9

By Age

Community Banks

Non-MDI

Less Than 5 Years 0.2 0.2 0.1 0.3 0.4 0.2

5 - 10 Years 1.3 1.4 0.0 0.3 1.0 0.7

Over 10 Years 1.6 1.6 0.5 0.8 1.1 1.1

MDI

Less Than 5 Years -0.2 0.5 -1.9 0.3 -1.2 -0.6

5 - 10 Years 1.2 1.4 -0.6 0.0 1.5 0.3

Over 10 Years 1.3 1.6 -0.4 0.2 0.8 0.6

Source: FDIC. 
FDIC Quarterly 56 2014, Volume 8, No. 3

Comparing the Share of Population Living in 

LMI Tracts

Based on these computed geographic service areas, 

comparisons can be made of the populations served by 

MDIs with those served by non-MDI community and 

noncommunity banks. The first such comparison, 

undertaken for 2006 and 2011, indicates that the share 

of service area populations that live in LMI census 

tracts is higher for MDIs. In fact, the share of estimated 

service area populations living in LMI tracts was 

substantially higher for African American, Hispanic 

American, and Asian American MDIs, compared with 

both community banks and noncommunity banks (see 

Chart 5.1). For example, in 2011 the median non-MDI 

community bank operated in a service area in which 

17 percent of the population resided in an LMI census 

tract. By comparison, the estimated service area population living in LMI tracts for the median African American MDI was 66.5 percent, or 3.9 times the share for 

the median non-MDI community bank. Similarly, the 

correspondence between the local demographics of 

MDI office locations, the lending activities they undertake, and the communities they endeavor to serve. 

This section compares the demographic characteristics 

of service areas of MDI institutions with those of nonMDI community and noncommunity banks, and 

explores lending by these groups of institutions in the 

context of these demographic characteristics.

This evaluation of the social impact of MDIs is based 

on a unique estimate of the relevant geographic service 

area of each institution (see inset box above). The 

results show that compared with other financial institutions, MDI offices tend to be located in communities 

with a higher share of the population living in LMI 

census tracts and with higher shares of minority populations. In addition, MDIs originate a greater share of 

their mortgages to borrowers who live in LMI census 

tracts and to minority borrowers compared with 

community or noncommunity institutions.

To examine the impact of MDIs on the communities 

they serve, it is necessary to first identify the geographic 

service area of each bank. Unfortunately, there are no 

readily available data indicating each bank’s self-identified market area. In addition, the availability of data 

indicating a bank’s Community Reinvestment Act 

(CRA) assessment area is subject to a de minimis test, and 

is therefore incomplete. Some previous researchers have 

estimated bank service areas as simply the sum of the 

census tracts in which each bank operates headquarters 

and branch offices. A shortcoming of this approach is 

that a census tract often covers only a small geographic 

area, and the average size of census tracts tends to decline 

as population density increases. In addition, looking only 

at the census tracts in which a bank’s offices are located 

ignores people living in other nearby tracts who may also 

be served by those offices.

This report employs a novel computation of the service 

area of each bank that also includes census tracts adjacent 

to and nearby those in which the bank’s offices are 

located. The following two-step process is used to identify the geographic service area of each bank:

Step 1: Determine a “reasonable distance” for 

customers to travel to do their banking business in 

a given metropolitan or nonmetropolitan area. For 

each geographic area, the reasonable distance is 

computed such that roughly 90 percent of the area’s 

population has at least one full-service bank branch 

within that distance. Generally this reasonable 

distance is substantially longer for nonmetropolitan 

areas than it is for more densely populated metropolitan areas. Moreover, reasonable distances can differ 

substantially across various metro and nonmetro areas 

located around the country. For example, using 2011 

data from the FDIC Summary of Deposits, New York 

City had the shortest reasonable distance of any 

MSA (0.6 miles), while Flagstaff, Arizona, had the 

longest reasonable distance (22.5 miles). For 

nonmetro areas, which are calculated on a statewide 

basis, reasonable distances based on 2011 data ranged 

from a low of 1.9 miles in Massachusetts to a high of 

66.2 miles in Alaska.

Step 2: Estimate the service area of each banking

office based on this “reasonable distance.” Using 

the reasonable distance calculation made for each 

metro or nonmetro area, a circle can be drawn 

around each banking office located there. Census 

tracts within or touching that circle are said to be 

served by that banking office, and the total population served by each banking office is the sum of the 

residents of all these census tracts. The total population served by each bank, in turn, is the sum of the 

residents of census tracts served by each of its individual banking offices.

Estimating the Service Area of Each Bank
FDIC Quarterly 57 2014, Volume 8, No. 3

Minority Depository Institutions

service area population who were African American 

was roughly 60 percent for African American MDIs, 

compared with less than 7 percent among community 

and noncommunity banks (see Chart 5.2).

Hispanic American MDIs have service area populations 

with an even higher median share of Hispanic American residents compared with non-MDIs (see Chart 5.3). 

In both 2006 and 2011, the median share of estimated 

service area population who were Hispanic American 

was nearly 80 percent among Hispanic American MDIs 

compared with roughly 9 percent or less among community and noncommunity banks.

Asian American MDIs also have service area populations with a higher share of Asian Americans compared 

with non-MDIs (see Chart 5.4).

median Hispanic American MDI’s estimated service 

area had 34.1 percent of its population living in LMI 

tracts, while the median Asian American MDI’s estimated service area had 45.5 percent of its population 

living in LMI tracts.

Estimated Service Area Minority Populations

Having offices in minority communities is also important to providing access to mainstream financial 

services. A 2011 FDIC survey showed that 10 million 

“unbanked” U.S. households did not have bank 

accounts with mainstream financial institutions, and 

another 14 million households could be considered 

“underbanked.”18 The survey also indicated that minority households were more likely than other households 

to be unbanked. Some 21.4 percent of African American households and 20.1 percent of Hispanic American 

households were found to be unbanked in 2011, 

compared with 4 percent of white households.

MDIs are important service providers to minority populations, which tend to have higher percentages of 

unbanked households than other population groups. 

Using the geographic service area designations, MDI 

offices are shown to be located in areas with a higher 

share of minority populations. Analysis of the demographic characteristics of these service areas reveals that 

in both 2006 and 2011, the minority share of estimated 

service area populations was much higher for all three 

groups of MDIs compared with non-MDIs. For example, 

in both 2006 and 2011 the median share of estimated 

18 See 2011 FDIC National Survey of Unbanked and Underbanked 

Households, http://www.fdic.gov/householdsurvey/.

The Median Share of Estimated Service Area Population

Living in LMI Census Tracts Is Higher Among MDIs

46%

72%

33%

49%

8%

24%

46%

67%

34%

46%

17%

27%

0%

10%

20%

30%

40%

50%

60%

70%

80%

All MDIs African

American

MDIs

Hispanic

American

MDIs

Asian

American

MDIs

Non-MDI

Community

Banks

Non-MDI

Noncommunity

Banks

2006 2011

Source: FDIC, U.S. Census Bureau.

Chart 5.1

Median Share of Estimated Service Area

Population Who Are African American 

Source: FDIC, U.S. Census Bureau.

2%

6%

63%

3%

7%

59%

0%

10%

20%

30%

40%

50%

60%

70%

African

American

MDIs

Non-MDI

Community

Banks

Non-MDI

Noncommunity

Banks

2006 2011

Chart 5.2

Median Share of Estimated Service Area

Population Who Are Hispanic

Source: FDIC, U.S. Census Bureau.

Hispanic

American

MDIs

Non-MDI

Community

Banks

Non-MDI

Noncommunity

Banks

2006 2011

2% 7%

80%

4%

9%

80%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Chart 5.3
FDIC Quarterly 58 2014, Volume 8, No. 3

African American MDIs appear to be particularly 

successful in their mission of serving African American 

borrowers. Chart 5.6 shows that the median share of 

HMDA-reported mortgages made to African American 

borrowers in 2006 was 78 percent for African American 

MDIs, compared with less than 1 percent for non-MDI 

community banks. While the median share of mortgages made to African American borrowers fell to 66.7 

percent for African American MDIs in 2011, it still far 

exceeded the less than 1 percent share reported by nonMDI community banks in that year. In fact, the share 

of mortgages made to African American borrowers by 

African American MDIs exceeded the already-high 

share of African Americans residing in their service 

area by 78 percent to 63 percent in 2006 and by 67 

percent to 59 percent in 2011.

Home Mortgage Lending of MDIs

MDIs not only maintain offices in communities with 

higher LMI population shares than other institutions, 

but among banks that report data under the Home 

Mortgage Disclosure Act (HMDA), MDIs also originate 

a greater share of their home mortgages to borrowers 

whose properties are located in LMI census tracts.19, 20

For example, in 2006 the median African American 

MDI originated half of its HMDA-reportable mortgages 

to borrowers for purchasing properties in LMI census 

tracts (see Chart 5.5). This is more than 4.5 times the 

share of mortgages originated to such borrowers by nonMDI community banks and more than 3.8 times the 

share of mortgages originated to such borrowers by nonMDI noncommunity banks.

Chart 5.5 shows that between 2006 and 2011 the share 

of mortgages originated in LMI census tracts declined 

for every group of institutions except African American 

MDIs. Still, in 2011, the median shares of mortgage 

loans made on properties located in LMI census tracts 

by MDIs exceeded the share made by non-MDI 

community banks by anywhere from 2.6 to 5.5 times.

19 Depository institutions that meet three criteria must report HMDA data: 

(a) assets as of December 31 of the year preceding data collection exceed 

an annually adjusted threshold ($40 million for collecting 2011 HMDA 

data and $35 million for collecting 2006 HMDA data); (b) on December 

31 of the year preceding data collection, the institution had a home or 

branch office in an MSA; and (c) in the calendar year preceding HMDA 

data collection, the institution originated at least one home purchase or 

refinance loan secured by a first-lien on a one-to-four-family dwelling.

20 HMDA reportable mortgages are home purchase, home improvement, and refinance mortgages. Home equity lines of credit for home 

purchase or improvement may be reported at the institution’s option 

(FFIEC 2010).

Median Share of Estimated Service Area Population

Who Are Asian or Pacic-Islander

Source: FDIC, U.S. Census Bureau.

Asian

American

MDIs

Non-MDI

Community

Banks

Non-MDI

Noncommunity

Banks

2006 2011

1%

3%

22%

1%

4%

30%

0%

5%

10%

15%

20%

25%

30%

35%

Chart 5.4

The Median Share of HMDA-Reported Mortgage

Originations for Properties in LMI Census Tracts

Is Higher Among MDIs

All MDIs Non-MDI

Community

Banks

Non-MDI

Noncommunity

Banks

African

American

MDIs

Hispanic

American

MDIs

Asian

American

MDIs

2006 2011

Source: FDIC, U.S. Census Bureau.

36%

11% 13%

22%

42%

9% 9%

50%

25%

52%

17%

25%

0%

10%

20%

30%

40%

50%

60%

Chart 5.5

Median Share of HMDA-Reported Mortgage

Originations to African American Borrowers

Source: FDIC, U.S. Census Bureau.

African

American

MDIs

Non-MDI

Community

Banks

Non-MDI

Noncommunity

Banks

2006 2011

0.4% 2%

78%

1%

67%

0% 0%

10%

20%

30%

40%

50%

60%

70%

80%

Chart 5.6
FDIC Quarterly 59 2014, Volume 8, No. 3

Minority Depository Institutions

Hispanic American MDIs also appear to be highly 

successful in their mission of serving Hispanic American borrowers. Chart 5.7 shows that the median share 

of HMDA-reportable mortgages made to Hispanic 

American borrowers in 2006 was 61 percent for 

Hispanic American MDIs, compared with less than 

1 percent for non-MDI community banks. In 2011, the 

median share of mortgages made to Hispanic American 

borrowers rose to 65 percent, while the share remained 

at less than 1 percent for non-MDI community banks.

Finally, Asian American MDIs also originated a higher 

percentage of their mortgages to Asian American 

borrowers. Chart 5.8 shows that the median Asian 

American MDI originated 40 percent of its HMDAreportable mortgages to Asian American borrowers in 

2006, compared with less than 1 percent for non-MDI 

community banks. By 2011, the median share of mortgages made to Asian Americans by Asian American 

MDIs had risen to 57 percent, while the median share 

for non-MDI community banks remained at less than 

1 percent. Similar to African American MDIs, the 

share of HMDA-reported mortgages originated by 

Asian American MDIs in 2006 and 2011 exceeded the 

median shares of Asian American populations they 

served in both years (22.1 percent in 2006 and 30.1 

percent in 2011, shown in Chart 5.4).

Section Summary

Compared with non-MDI community banks, MDI 

offices tend to be located in communities with a higher 

share of their population living in LMI census tracts 

and a higher share of minority residents. In addition, in 

a comparison of mortgage lending based on analysis of 

Home Mortgage Disclosure Act data, MDIs originated a 

greater share of their mortgages for properties located in 

LMI census tracts and to minority borrowers compared 

with non-MDI community and noncommunity banks. 

These group differences were quite substantial in 

magnitude and were found to be statistically significant 

using two different statistical tests. On the basis of these 

comparisons, MDIs appear to be highly successful in 

carrying out their mission of serving low- and moderateincome as well as minority households.

Median Share of HMDA-Reported Mortgage

Originations to Hispanic White Borrowers

Source: FDIC, U.S. Census Bureau.

Hispanic

American

MDIs

Non-MDI

Community

Banks

Non-MDI

Noncommunity

Banks

2006 2011

0.7% 2.2%

61%

1.9%

65%

0.5% 0%

10%

20%

30%

40%

50%

60%

70%

80%

Chart 5.7

Median Share of HMDA-Reported Mortgage

Originations to Asian or Pacic-Islander Borrowers

Source: FDIC, U.S. Census Bureau.

Asian

American

MDIs

Non-MDI

Community

Banks

Non-MDI

Noncommunity

Banks

2006 2011

0% 1.0%

40%

1.4%

57%

0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Chart 5.8
FDIC Quarterly 60 2014, Volume 8, No. 3

Our comparison of the social impact of MDIs and nonMDI community banks has shown that MDIs serve 

higher percentages of populations residing in LMI census 

tracts and originate higher percentages of mortgages to 

LMI and minority populations. But are these differences 

statistically significant? To answer this question, we 

follow the techniques applied to comparisons of financial performance in Section 4 and conduct two statistical 

tests using the same observational techniques: the t-test 

and the Wilcoxon rank-sum test.

The t-test compares the distribution of the share of the 

estimated service population living in LMI census tracts 

and the share of HMDA-reported mortgage originations 

for properties in LMI census tracts, and tests whether or 

not the mean values reported for both groups are equal 

in a statistical sense. A Wilcoxon rank-sum test is also 

employed to indicate whether the overall distributions 

for the two subject groups differ to a statistically significant degree. Both tests were applied to the share of 

service-area populations residing in LMI census tracts 

and the share of HMDA-reportable loans made on properties located in LMI census tracts for 2006 and 2011 

(see Chart below).

The t-tests and Wilcoxon rank-sum tests both consistently indicate that differences in population demographics and lending characteristics between MDIs and 

of non-MDI community banks are statistically significant. MDIs reported significantly higher shares of service 

populations living in LMI census tracts than did nonMDI community banks in both periods, and also reported 

significantly higher shares of HMDA-reported mortgage 

originations in LMI census tracts as well. From the 

results of our analysis, it appears that statistically meaningful differences exist between MDI and non-MDI 

community bank service area demographic and mortgage origination characteristics. Additional information 

related to these tests and the methodology is available in 

the Appendix.

Are There Statistically Significant Differences in the Demographic and 

Income Characteristics of the Geographic Service Areas of MDI 

and Non-MDI Community Banks?

Demographic and Lending Characteristics of MDI and Non-MDI Community Banks, 2006 and 2011

Source: FDIC. 

*Indicates statistical difference at 5 percent significance level.

Average Values/T-Test Median Values/Rank-Sum Test

15.5%

16.8%

14.4%

20.7%

37.7%*

46.3%*

31.2%*

45.9%*

0% 10% 20% 30% 40% 50%

Share of HMDA-Reported Mortgage

Originations for Properties in LMI

Census Tracts

Share of Estimated Service Population

Living in LMI Census Tracts

Share of HMDA-Reported Mortgage

Originations for Properties in LMI

Census Tracts

Share of Estimated Service Population

Living in LMI Census Tracts

10.9%

8.3%

9.3%

17.0%

36.4%*

45.6%*

25.0%*

46.1%*

0% 10% 20% 30% 40% 50%

2011

2006

MDIs

Non-MDI Community Banks

Authors: Eric C. Breitenstein, Economic Analyst

Division of Insurance and Research

Karyen Chu, Chief

Division of Depositor and Consumer Protection

Kathy Kalser, Assistant Director

Division of Insurance and Research

Eric W. Robbins, Regional Manager

Division of Insurance and Research

The authors would like to thank Benjamin R. Backup, 

Camille Campanella, Andrew Driscoll, Denis Dudnik, 

Miguel Hasty, Cody Hyman, Schuyler Livingston, 

Alexander Marshall, John McGee, Arthur Micheli, 

Silvia L. Ramirez, Rachelle Rose, Dhruv Sharma, 

Ronald W. Sims II, and Benjamin Tikvina for their

significant contributions to the analysis of MDIs undertaken in this study.
FDIC Quarterly 61 2014, Volume 8, No. 3

Minority Depository Institutions

ables. To the extent that the goal of conducting statistical tests is to compare means or medians between 

groups of institutions, the presence of these extreme 

values can result in a misleading comparison. To minimize the influence of outliers, we limit our analysis to 

the core of observations that are within four standard 

deviations from the mean for all analysis variables. Any 

institution reporting a value greater than or equal to 

four standard deviations from the average for any analysis variable is defined as an outlier and is excluded from 

the analysis for that particular year. This process 

resulted in the exclusion of 1,926 of the 101,587 total 

observations available for the 2001–2012 period, or just 

fewer than 2 percent of all available observations.

Statistical Tests—Financial Performance

In analyzing financial performance, we use a sample 

composed of annual bank financial performance metrics 

from 2001 through 2012. This sample is used to make 

inferences regarding the population distributions of MDI 

and non-MDI community bank financial ratios. For 

each analysis variable, we conduct statistical tests based 

on the null hypothesis that the population means or 

distributions are identical, and the alternative hypothesis that the mean or distribution for one population 

differs from that of the other population. For any particular comparison, our threshold for statistical significance 

is 5 percent. Comparisons that produce p-values smaller 

than 5 percent reflect statistically significant differences 

between the two samples. In many cases, the p-values 

we have calculated are less than 1 percent.

Our first comparison for each analysis variable was based 

on the t-test, which is commonly used to test whether 

the means of two samples randomly drawn from independent, normally distributed populations are statistically different. A t-statistic was calculated from the 

means, variances, and sizes of each subject group. 

Comparing this test statistic with values drawn from the 

Student t-distribution, we calculated p-values that 

express the probability that the null hypothesis (that the 

means are equal) is correct. Pooling all non-outlier observations for the 2001–2012 period, we obtained results for 

comparisons between MDIs and non-MDI community 

banks for six measures of financial performance.

As discussed previously, one caveat associated with these 

results is that the population distributions for each variable are likely not normal. Moreover, while observations 

made within any given year may be independent, observations for the same institution across years are unlikely 

to meet this assumption. To account for the lack of independence across years, these t-tests were also run for 

APPENDIX: Additional Information on the 

Statistical Significance Tests

Data

We perform an observational study on FDIC-insured 

financial institutions that compares data on MDIs to 

data on non-MDI community banks. In an observational study, the assignment of subjects to groups is 

nonrandom and outside the control of the observer. 

Although our results indicate statistically significant 

differences exist between certain financial metrics of 

MDIs and non-MDI community banks, our results do 

not prove that being an MDI is the only reason for 

these differences. This is because of the possible existence of confounding factors. For example, MDIs may 

have greater exposure to poorer-performing markets 

than community banks in the aggregate. However, 

institutions in both subject groups operating within the 

same market may perform similarly. Further research 

into the comparative financial performance of MDIs 

and non-MDI community banks could compare institutions operating within the same geographic area to 

institutions located outside the area.

As noted earlier, the comparative analysis of financial 

performance of this study was completed in connection 

with the 2013 Interagency MDI/CDFI Bank Conference, and is therefore based on bank-level data from the 

December Call and Thrift Financial Reports each year 

from 2001 through 2012. These data are used to calculate the following financial ratios for each bank: pretax 

return on average assets, annualized net interest 

income, annualized noninterest income, annualized 

noninterest expense, annualized provisions, and the 

efficiency ratio. Each ratio is calculated by dividing the 

appropriate income statement item by an institution’s 

five-quarter average assets.

A key assumption made in constructing some statistical 

tests is whether the variables of interest follow a normal 

distribution. As part of our analysis, we tested pooled and 

annual cross sections of the financial ratio data for 

normality using the Anderson-Darling, Cramer-von 

Mises, and Kolmogorov-Smirnov tests. In every case we 

rejected the null hypothesis of normally distributed population at significance levels less than or equal to 1 percent.

The data were also found to be heavily influenced by 

outliers, or observations well outside of a variable’s usual 

range. For example, a handful of banks report efficiency 

ratios in excess of 10,000 percent, and two dozen report 

efficiency ratios greater than 5,000 percent. Similarly 

extreme values are also found among the other vari-
FDIC Quarterly 62 2014, Volume 8, No. 3

robustness of our conclusion that the observed differences the financial performance between MDIs and 

non-MDI community banks are statistically significant.

Statistical Test—Social Impact

A parallel set of statistical tests are applied below to the 

comparisons between MDIs and non-MDI community 

banks in terms of the social impact measures described 

in Section 5. Table A.3 applies a t-test to the comparison of mean values between these two groups for the 

share of service-area populations residing in LMI census 

tracts and the share of HMDA-reportable mortgages 

made on properties located in LMI census tracts. In 

both cases, the rather large differences in sample means 

observed in Section 5 are found to be statistically significant at the 5 percent level.

A parallel set of t-test results (not reported here) also 

indicates statistically significant differences in mean 

values for these social impact variables between MDIs 

and non-MDI noncommunity banks.

Because these comparisons of the mean values for 

social impact variables depend on the same statistical 

assumptions as the t-test applied above to financial 

performance variables, we also undertake a second 

statistical test based on the Wilcoxon rank-sum test. 

The results in Table A.4 indicate that, compared with 

non-MDI community banks, MDIs serve a significantly 

higher share of populations residing in LMI census 

tracts and originate a significantly higher share of 

HMDA-reportable mortgages in LMI census tracts. 

A parallel set of comparisons between MDIs and nonMDI noncommunity banks (not reported here) also 

indicates significantly higher shares for MDIs in terms 

of both measures.

each individual year. The signs of the relationships indicated in Table A.1 were observed in every individual 

year, while the p-values calculated for individual years 

were below 5 percent in all but a handful of cases. These 

results point to a consistent pattern of statistical relationships between group means as reflected in Table A.1.

Although the t-statistic is generally robust to moderate 

departures from the assumption of normally distributed 

populations, the fact that the populations are likely not 

normally distributed led us to conduct a second statistical test.21 The Wilcoxon rank-sum test was proposed in 

1945 by chemist Frank Wilcoxon as an alternative test 

for comparing two samples without the need to assume 

any particular form for their distributions.22 Using this 

method, a test statistic is calculated based on the rankings of observations for each variable in the pooled 

sample. Within that pooled sample, the ranks for observations belonging to each sample are summed independently and scaled by the size of the overall sample. For 

samples for which the variable distributions are very 

similar, these scaled rank-sums will be nearly equal to 

one another. Alternatively, the sample distributions 

can be said to be statistically different if their scaled 

rank sums differ to a sufficient degree. This type of 

comparison can be used to test the null hypothesis of 

equal distributions for two populations (see Table A.2).

The results of the Wilcoxon rank-sum test in Table A.2 

are perfectly consistent with the results of the t-test in 

Table A.1. This consistency of results adds to the 

21 See Dennis D. Wackerly, William Mendenhall III, and Richard L. 

Scheaffer, Mathematical Statistics with Applications, 7th ed. (Belmont, 

CA: Brooks/Cole, 2008).

22 See Frank Wilcoxon, “Individual Comparisons by Ranking Methods,” 

Biometrics Bulletin, 1, no. 6 (Dec. 1945): 80–83, http://www.jstor.org/

stable/3001968.

Table A.1

T-tests of Differences in Means of Selected Performance Measures of Minority Depository 

Institutions (MDI) and Non-MDI Community Banks, 2001–2012

Pretax ROA

Noninterest 

Income

Noninterest 

Expense

Net Interest 

Income Provisions

Efficiency 

Ratio

Mean MDI 0.30 1.05 4.01 3.77 0.57 89.0

Non-MDI CB 0.93 0.73 3.13 3.63 0.33 74.4

T-test t-statistic 12.9 -6.8 -18.9 -7.0 -12.9 -9.9

Interpretation MDI Lower MDI Higher MDI Higher MDI Higher MDI Higher MDI Higher

Notes: The community bank is defined in the FDIC Community Banking Study (2012).

Variables other than Efficiency Ratio are expressed as a percent of average assets.

Reported averages are not weighted.

The t-statistic is a measure of the difference in means between two samples, adjusted by the sample sizes and variation of the data. Larger absolute values imply greater differences.

The significance level is the probability of observing the result by chance, so that lower values of the significance level indicate greater likelihood that the difference between the populations is 

not random. We consider the results statistically significant if the probability of observing them by chance is less than 5 percent.
FDIC Quarterly 63 2014, Volume 8, No. 3

Minority Depository Institutions

Table A.2

Wilcoxon Rank-Sum Tests of Differences in Distributions of Selected Performance Measures 

of Minority Depository Institutions (MDI) and Non-MDI Community Banks, 2001–2012

Pretax ROA

Noninterest 

Income

Noninterest 

Expense

Net Interest 

Income Provisions

Efficiency 

Ratio

Median MDI 0.7 0.71 3.62 3.78 0.28 77.0

Non-MDI CB 1.14 0.58 2.96 3.62 0.17 68.4

Rank-Sum 

Test

p-value <0.01 <0.01 <0.01 <0.01 <0.01 <0.01

Result MDI Lower MDI Higher MDI Higher MDI Higher MDI Higher MDI Higher

Notes: The community bank is defined in the FDIC Community Banking Study (2012).

Variables other than Efficiency Ratio are expressed as a percent of average assets.

The significance level is the probability of observing the result by chance. Lower p-values indicate greater likelihood that the difference between the populations is not random. We consider the 

results statistically significant if the probability of observing them by chance is less than 5 percent.

Table A.4

Wilcoxon Rank-Sum Tests of Differences in Distributions of Selected Social Impact Measures 

of Minority Depository Institutions (MDI) and Non-MDI Community Banks

Share of Estimated Service Population Living in LMI Census Tracts

2006 2011 Conclusion

Mean MDI 45.6% 46.1%

MDIs have higher shares of service area 

populations living in LMI census tracts

Non-MDI CB 8.3% 17.0%

Rank-Sum Test p-value <0.01 <0.01

Result MDI Higher MDI Higher

Share of HMDA-Reported Mortgage Originations for Properties in LMI Census Tracts

2006 2011 Conclusion

Mean MDI 36.4% 25.0%

MDIs have higher shares of originations 

for properties in LMI census tracts

Non-MDI CB 10.9% 9.3%

Rank-Sum Test p-value <0.01 <0.01

Result MDI Higher MDI Higher

Notes: The community bank is defined in the FDIC Community Banking Study (2012).

The significance level is the probability of observing the result by chance, so that lower values of the significance level indicate greater likelihood that the difference between the populations is 

not random. We consider the results statistically significant if the probability of observing them by chance is less than 5 percent.

Table A.3

T-tests of Differences in Means of Selected Social Impact Measures 

of Minority Depository Institutions (MDI) and Non-MDI Community Banks

Share of Estimated Service Population Living in LMI Census Tracts

2006 2011 Conclusion

Mean MDI 46.3% 45.9%

MDIs have higher shares of service area 

populations living in LMI census tracts

Non-MDI CB 16.8% 20.7%

T-test t-statistic 13.4 12.4

Interpretation MDI Higher MDI Higher

Share of HMDA-Reported Mortgage Originations for Properties in LMI Census Tracts

2006 2011 Conclusion

Mean MDI 37.7% 31.2%

MDIs have higher shares of originations 

for properties in LMI census tracts

Non-MDI CB 15.5% 14.4%

T-test t-statistic 10.3 7.1

Interpretation MDI Higher MDI Higher

Notes: The community bank is defined in the FDIC Community Banking Study (2012).

The t-statistic is a measure of the difference in means between two samples, adjusted by the sample sizes and variation of the data. Larger absolute values imply greater differences.

The significance level is the probability of observing the result by chance, so that lower values of the significance level indicate greater likelihood that the difference between the populations is 

not random. We consider the results statistically significant if the probability of observing them by chance is less than 5 percent.