CDFI Fund Transaction Level Data and CDFI Lending in the Southeast

Of the 74.5 percent of Southeast counties that received some level of investment from 2009 to 2014, 62.3 percent received less than $1 million total, and 85.1 percent received less than $1 million on average annually. As previously discussed, this pattern can be jointly attributed to the geographic positioning of distressed, underserved, low- and moderate-income markets, and to limited CDFI capacity.

The CDFI Fund data suggest an association between the number of CDFIs operating in a county and the level of CDFI investment in that county. As shown in Table 4, the median dollar amount of CDFI investment from 2009 to 2014 received among counties based on the number of CDFIs investing in the county generally increases with the number of associated CDFIs. CDFI Fund transaction level report data does not allow for an analysis of the impact of physical location on level of investment, as transactions cannot be traced to CDFIs headquartered in particular areas, but the data does support a relationship between high numbers of operational CDFIs and high levels of investment in general over a six year span. 

The counties surrounding Washington, D.C., Raleigh, North Carolina and Little Rock, Arkansas, were areas of concentrated CDFI investment from 2009 to 2014. The relatively high levels of investment experienced in these areas may be attributed to the joint effect of the presence of high needs markets, coupled with a level of resources and connectedness that makes the area attractive for CDFI operations. For instance, Wake County, North Carolina, home to the city of Raleigh, had a total of $110 million in investment from 940 transactions completed by 16 CDFIs from 2009 to 2014. No census tracts in the county were classified as distressed or underserved by the FFIEC at the time of this investment, but approximately 21 percent of the census tracts in the county were LMI in any given year from 2009 to 2014. There are at least three CDFIs headquartered in Raleigh and at least five headquartered in nearby Durham County, according to the CDFI contact list assembled by Richmond Fed staff. This clustering of CDFIs in an urban area with LMI census tracts may result in localized provision of funding.

As a group, these areas may not be the most distressed or underserved areas based on the FFIEC classification process, or necessarily have the highest concentrations of LMI census tracts, but the CDFI Fund transaction data seem to indicate that the highest levels of CDFI investment occur in counties with relatively high levels of both resources and need. The CDFI transaction-level investment data provide some nuance to the patterns previously discussed regarding CDFI presence and activity in LMI, distressed and underserved counties. While the presence of CDFI headquarters are not necessarily tied to increased investment in a county, there are examples of areas in the Southeast in which an urban environment supports multiple CDFI headquarters, attracts investment from CDFIs located outside the county and receives a relatively high level of CDFI investment. This association requires further analysis beyond the scope of this publication, but it is anecdotally supported by select localities in the Southeast that if a county is an attractive place for CDFIs to headquarter, CDFIs will in turn support key markets within that county.