May 08, 2001
Louisville Community Development Bank Focuses on Inner City Neighborhoods
by Mark Thomsen
Unique bank helps turn pockets of despair into pockets of hope.
A welfare recipient and a mother of two, Kim Chism was worried when welfare reform came to Kentucky
a few years ago. The prospect of losing her benefits and having to find a job while still taking
care of her kids was frightening. Today, however, Chism brims with confidence as the director of
Marchman Learning Centre, a day care center in Lousiville. Chism now not only supports herself and
her family, but she also helps provide a much-needed service to the community.
Marchman Learning Centre is one of six day care centers that have been started or
expanded through loans from the Louisville Community Development Bank (LCDB).
LCDB is a for-profit, FDIC-insured, commercial bank that concentrates its operations in 12
distressed inner city neighborhoods in Louisville. It has focused on this limited area since
opening in January 1997.
"There were many, many people that said that we would fail
because of this self-imposed geographic restriction," said LCDB President and CEO, Kelly Downard.
"Ironically, these restrictions are why we are succeeding. Because all we do are loans -- no
checking accounts, no car loans, no tellers, no ATMs - and only in 12 neighborhoods, we easily
maintain our focus."
LCDB is completely self-sustaining, and receives no public funding or
grants. It obtains all of its assets from the three types of Certificates of Deposit (CDs) it
offers: the Community CD, which has a rate of 0-3 percent with a term of 3-24 months; a Market
Rate CD, which has market rates and a term of 3-24 months; and the Easy Access CD, which has a
competitive rate and a six-month term, but is redeemable without penalty after seven days.
LCDB's investments in the community come in the form of business, residential and commercial
real estate loans. According to Downard, in four years and three months LCDB has made almost $25
million in loans that have saved or created 931 jobs. Outstanding results, especially considering
that in the twelve neighborhoods, 38 percent of the residents live below the poverty level and the
unemployment rate is three times the national average
The largest project LCDB is involved
in is revitalizing the Park DuValle neighborhood. Park DuValle had been pocket of abject poverty
in Louisville, where approximately 3,500 people lived in a monstrous public housing project.
Through an innovative $240 million initiative that includes the U.S. Department of Housing and
Urban Development (HUD) and the City of Louisville, a ten-year, three-phase effort will restore an
When completed, the 125-acre Park DuValle community will consist of
450 self-owned and more than 600 rental housing units. The neighborhood will also host schools, a
community health center, green spaces, numerous shops, and several churches. LCDB, HUD and about
five other institutions are providing the construction loans for the rental units. At least 30
different banks and mortgage companies will provide permanent financing once construction is
LCDB is wholly owned by the Louisville Development Bancorp. The Bancorp, owned
by twenty-eight local businesses and individuals, also has a real estate development affiliate, the
Louisville Real Estate Development Company, and a non-profit affiliate, the LCDB Enterprise Group.
The Real Estate Development Company concentrates on housing revitalization, and the Enterprise
Group helps start-up and expand local businesses, as well as provide business training. All four
organizations share the same mission of stimulating economic growth in the 12 neighborhoods.
Downard attributes the bank's success to keeping abreast of best practices nationwide, learning
from successes and failures, broadening partnerships and, last but not least, listening to the
neighbors. He believes the most important contribution the bank makes is giving people hope.
"Optimism instead of pessimism, confidence versus hopelessness, happiness taking the place of
despair - this is what is passed on to the children," Downard said of the cumulative effect of the
bank's initiatives. "It is how we are shaping our children into adults that has the greatest
impact on all of us."
Louisville Community Development Bank