KBRA Financial Intelligence

Key Federal Funding Preserved for Fast-Growing Banks Serving Minority Communities

With the signing of a consolidated appropriations act into law, funding for the Treasury Department’s CDFI Fund will be maintained at $324 million for FY 2026. KBRA Financial Intelligence (KFI) noted in January that this program, which provides supplemental capital and growth support for CDFI-certified banks, had been at risk of a nearly 60% reduction under earlier House of Representatives and White House budget proposals.

A recent KFI analysis shows that the 193 banks currently certified as CDFIs have outperformed their community bank peers over the past five years, likely supported in part by strong backing from the CDFI Fund. Within that group, 33 also hold the separate Minority Depository Institution (MDI) designation, which the FDIC issues to banks that are either majority-owned by minority individuals or have majority-minority boards. These banks primarily serve minority communities, with the goal of preserving and promoting institutions that play a critical role in providing financial services, credit, and community development in underserved populations.

While MDI status does not provide access to supplemental funding as CDFI certification does, it does offer targeted FDIC engagement, technical assistance, training resources, data tools, and facilitated partnerships, as well as greater visibility with regulators, investors, and community stakeholders. As of 3Q 2025 Call Report data, 156 MDI banks collectively held more than $385 billion in assets—a significantly larger total than the $128 billion held by CDFI banks. The number of MDI banks had been declining for several years, reaching a low of 142 in 2020, but has since rebounded to 156—the highest level recorded by the FDIC since 2016.

The 33 institutions at the intersection of both designations range in size from $23 million to $4.3 billion in assets and collectively hold about $29 billion—roughly one-fifth of total assets among CDFIs. These banks have achieved combined asset growth of 57% over the past five years, outpacing the growth of institutions that hold only MDI or CDFI status.