Banking Deserts Source & Methodology
Callahan & Associates’ interactive Banking Deserts map – Located in the Market Share Reporting section of Peer Suite – allows users to locate Banking Deserts and Potential Banking Deserts within their selected market.
Banking Deserts are defined as Census Tracts – geographic subdivisions of counties, containing between 1,200 and 8,000 permanent residents – that don’t have a banking branch within a given distance. Americans without access to a physical branch are far more likely to:
- Struggle with personal financial management
- Have lower average credit scores
- Qualify as being “underbanked”
In other words, banking deserts contain the exact populations that credit unions are tasked with and best-equipped to serve!
FedCommunities Banking Deserts: Methodology
The banking desert data visualized within Peer Suite comes from FedCommunities, a division of the U.S. Federal Reserve system focused on community development. Using branch location data for banks and credit unions across the United States, FedCommunities determined the banking desert status for every census tract in the country. Radii (distance to nearest branch) used to determine a banking desert can vary based on a census tract’s community type:
- Urban Communities: No branches within 2 miles
- Suburban Communities: No branches within 5 miles
- Rural Communities: No Branches within 10 miles
These distance delineations are based on factors like the availability of public transportation and access to the internet. They are derived from guidelines for “areas with very low branch access” in the Interagency Notice of Proposed Rulemaking to Implement the CRA.
The urbanization level of census tracts is based on proximity to Metropolitan Statistical Areas (MSAs) as used by the U.S. Census Bureau.
FedCommunities also labeled some census tracts as Potential Deserts, defined as census tracts that would become deserts if one nearby branch were to close. The Potential Desert methodology is based upon the “areas with low branch access” criteria in the Interagency Notice of Proposed Rulemaking to Implement the CRA. Potential Deserts are also shown on Callahan’s Dashboard.
Branch & Census Data
In addition to visualizing FedCommunties’ Banking Desert and Potential Desert census tracts, Peer Suite overlays the locations of physical branches in the area, and contains tract-by-tract demographic data supplied by a combination of Callahan, FedCommunties, and the U.S. Census Bureau. This data includes:
- Locations of all bank and credit union branches in an area (sourced by the FDIC and NCUA, cleaned and curated by Callahan & Associates)
- Tract population (U.S. Census)
- Number of households (U.S. Census)
- Median income (U.S. Census)
- The low income (LMI) or medium/upper income (MUI) status of a tract (sourced by FedCommunities, determined by if the median income in a tract is greater than or less than 80% of the area median, per the U.S. Census)
FedCommunities methodology for determining banking deserts involves rigorous cross-analysis and cleaning of multiple public datasets. Callahan & Associates vetted this methodology against our own U.S. branch location data sets.
We believe that understanding banking deserts is crucial for a credit union industry tasked to serve the underserved.
Do you know where the deserts are in your market?
Callahan’s Banking Desert Map – built with data from FedCommunties – can help you locate and understand the deserts in your own backyard, giving you the foundation you need to turn your credit union into a financial oasis for the underbanked.
Begin exploring this dataset using using this guide: Navigating Peer Suite Banking Deserts Map