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Insights into Consumers’ Financial Standing and Distress from 2019-2022: Evidence from a CDFI

This staff report provides a window into the financial circumstances faced by financially vulnerable consumers, as seen through the experiences of customers of Southern Bancorp Bank, a Community Development Financial Institution (CDFI) that serves some of the most economically underserved areas in the United States. We explore how account balances evolved from 2019 to 2022 and how the share of customers with a negative account balance has changed over time. Key findings include:

  • In general, consumers were better off in August 2022 than in August 2019, as measured using account balance data, but have nearly returned to their pre-pandemic starting point. Bank account balances increased after the onset of the pandemic—coinciding with the expansions of federal income support—but have generally been declining since the third and final stimulus payment was issued in March 2021.
  • High rates of inflation eroded customers' gains. Customers' median nominal account balances were $521 higher in August 2022 (median balance $1,726) than in August 2019 ($1,205), but adjusting for inflation reduces these gains by nearly half (46 percent). The inflation-adjusted median gain during this period was only $281 ($1,493 in August 2022 versus $1,212 in August 2019).
  • Financial distress, measured as experiencing a negative account balance in a month, declined with the expansion of federal benefits, but generally trended upward after the third stimulus payment was issued. The share of customers with a negative account balance decreased from 14 percent in August 2019 to 12 percent in August 2022. The decrease in the share of customers with a negative account balance is especially large among those with multiple negative account incidents prior to the pandemic.
Full report

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